Tax Rates and Tax Bands. BUDGET SUMMARY 2008 The tax rates remain unchanged at 20% and 41%. The standard rate tax band (20%) has been widened. INCOME TAX The table below sets out the tax rates and bands. In his Budget Statement on 5 December 2007, the Personal 2007 2008 Minister for Finance announced a number of changes to Circumstances ? ? the personal tax system. Single/Widowed without 34,000 @ 20% 35,400 @ 20% Tax Credits dependant Balance @ 41% Balance @ 41% The table below outlines increases for 2008. children Single/Widowed Tax Credit 2007 ? 2008 ? qualifying for 38,000 @ 20% 39,400 @ 20% Single Person 1,760 1,830 One Parent Balance @ 41% Balance @ 41% Married person 3,520 3,660 Family Tax PAYE Credit 1,760 1,830 Credit Widowed person (without 2,310 2,430 Married Couple 43,000 @ 20% 44,400 @ 20% dependant children) one spouse with Balance @ 41% Balance @ 41% One Parent Family Credit 1,760 1,830 Income Incapacitated Child Credit Max 3,000 3,660 Married Couple 43,000 @ 20% 44,400 @ 20% Blind Tax Credit both spouses with increase of with increase of Single person 1,760 1,830 with Income 25,000 max. 26,400 max. One Spouse Blind 1,760 1,830 Balance @ 41% Balance @ 41% Both Spouses Blind 3,520 3,660 Widowed Parent Exemption Limits Bereaved in 2007 - 4,000 The exemption limits for persons aged 65 years and over 2006 3,750 3,500 have been increased as indicated in the table below: 2005 3,250 3,000 2004 2,750 2,500 Personal 2007 2008 2003 2,250 2,000 Circumstances ? ? 2002 1,750 - Single/Widowed Age Tax Credit 65 years of age 19,000 20,000 Single/Widowed 275 325 & over Married 550 650 Married Couple Dependent Relative 80 80 65 years of age 38,000 40,000 Home Carer 770 900 & over The limits for Single/Widowed persons aged under 65 and The following reliefs remain unchanged: Married couples aged under 65 remain unchanged at ?5,210 and ?10,420 respectively. Relief 2007 2008 (Allowed at the taxpayer’s top ? Max ? Max Marginal Relief will continue to apply where income does rate of tax) not greatly exceed the relevant exemption limit. Employing a Carer 50,000 50,000 The above exemption limits are increased by ?575 for each of the first two dependent children and by ?830 for the third and subsequent children. Changes to Standard Rated Reliefs are as follows: (Allowed at 20% rate band) Tax Relief at Source – Mortgage Interest Relief Rent Tax Relief 2007 2008 The current annual ceiling on the amount of interest that ? Max ? Max can be allowed on a mortgage is being increased with Single - under 55 1,800 2,000 effect from 1 January 2008 for first-time buyers from Married/Widowed - under 55 3,600 4,000 ?8,000/?16,000 single/married to ?10,000/?20,000 Single - 55 & over 3,600 4,000 single/married. The additional relief will be available for Married/Widowed - 55 & over 7,200 8,000 the first seven years for which there is an entitlement to mortgage interest relief. Trade Union Subscriptions 300 350 The ceiling for non-first-time buyers remains unchanged Service Charges at ?3,000/?6,000 for single/married. Relief on service charges remains unchanged. A maximum of ?400 tax relief is granted (at 20% tax rate) in 2008 for charges paid in the year 2007. Rent-a-Room Scheme The limit of the exemption from income tax which applies to rent received, where a person rents out a room or rooms in his or her principle private residence, is to be increased from ?7,620 to ?10,000.
Specified Rates for Preferential Home Loans and PRSI & HEALTH CONTRIBUTIONS Other Loans An employee in receipt of a preferential loan is charged The following changes are effective from 1 January 2008: income tax on the difference between the interest actually paid and the amount which would have been payable at Employee’s Annual Earnings Ceiling the “specified” rates of interest for the loans. To reflect The employee’s annual earnings ceiling (above which they increases in interest rates, the specified rate in respect of pay no social insurance contributions) is being increased home loans is being increased from 4.5% to 5.5% and the from ?48,800 to ?50,700. specified rate in respect of other loans is being increased from 12% to 13%. These changes will take effect from 1 Employee income thresholds January 2008. The threshold for employee PRSI is being increased from ?339 a week to ?352 a week. BUSINESS EXPANSION SCHEME (BES) The requirement that recycling companies must have The threshold for payment of the 2% Health Contribution received grant assistance before availing of the Business is being increased from ?480 a week to ?500 a week. Expansion Scheme (BES) is to be replaced by a requirement that their business proposals must be The additional 0.5% Health Contribution on earnings certified by an industrial development agency or County exceeding ?1,925 per week (equivalent to ?3,850 per Enterprise Board before they avail of the scheme. As the fortnight and to ?8,342 per month) is unchanged. BES is an approved State aid, it will be necessary to advise the European Commission of this proposed change. The annual earnings threshold for the Health Contribution is being increased from ?24,960 to ?26,000. Extension of S481 Film Relief Employee's PRSI-Free Allowance The current provisions in relation to the tax relief for The PRSI-Free Allowance for employees in Classes A and investment in films are due to terminate on 31 December H with weekly earnings of more than ?352 remains at 2008. The scheme will be renewed for another 4 years to ?127 per week and at ?26 per week for all employees in 31 December 2012. Any revisions that may be necessary Classes B, C and D.: to the scheme will be provided for in the Finance Bill 2008. VAT Capital allowances and (and expenses) for business cars VAT Registration Threshold for SMEs A revised scheme for capital allowances and leasing The VAT registration thresholds for small businesses are expenses for cars used for business purposes is being being increased from ?35,000 to ?37,500 in the case of introduced. The revision will link the availability of such services, and from ?70,000 to ?75,000 in the case of allowances and expenses to the CO2 emission levels of the goods. These increases will take effect from 1 May 2008. vehicles. Cars will be categorised by reference to CO2 emissions with the emissions bands being broadly Reduced VAT rate for certain agricultural inputs consistent with the new VRT system, as follows: used to produce bio fuel The VAT rate on the supply of seeds, and of roots, bulbs, rhizomes and similar supplies used for the agricultural Category A Category Category Category production of bio fuel crops, e.g. elephant grass, will be Vehicles B/C Vehicles D/E Vehicles F/G Vehicles reduced from 21% to 13.5% with effect from 1 March 0 –120g/km 121 – 155 156 – 190 191 g/km + 2008. g/km g/km Review of VAT on Property Transactions Cars with CO2 emission levels in Category A/B/C above Provision will be made in the Finance Bill for the will benefit from capital allowances at the current car introduction of a new system for applying VAT to property value threshold under the existing scheme of ?24,000, transactions. The changes are designed to simplify the regardless of the cost of the car. Cars in Category D/E rules, while ensuring a more equitable treatment for will receive allowances of 50% of the current car value taxpayers. The new rules will apply to both residential threshold or 50% of the cost of the car, if lower. Cars in and commercial property supplied in the course of Category F/G will not qualify for capital allowances. business. The VAT charge on sales of residential property remains unchanged. The new system will take effect from Leasing Expenses 1 July 2008. Cars in Category A/B/C above will benefit from a proporti