PROPERTY BASED CAPITAL ALLOWANCES
“The draconian retrospective restriction on capital allowances in Budget 2011 was both unexpected and unwelcome,” writes Ernst & Young partner Jim Ryan.
Tag: Budget 2011
TAXING YOUR PENSION – BUDGET 2011
The main changes announced include:
- Employee pension contributions will no longer qualify for PRSI relief and the health levy
- For 2011, marginal relief will be at 41%
- With effect from January 1, employers’ PRSI will apply to 50% of employee pension contributions, including Additional Voluntary Contributions (AVCs)
- The annual earnings cap for pension relief will fall from €150,000 to €115,000. The €115,000 earnings cap will also apply to contributions made in 2011 in respect of the 2010 tax year
- Tax relief will be reduced to 34% in 2012, 27% in 2013 and 20% in 2014
- Effective December 7, 2010, the maximum allowable pension fund for tax purposes is limited to €2.3m. Higher thresholds apply between €2.3m and the previous threshold of €5,418,085
- Effective January 1, the maximum allowable tax-free lump sum drawdown from a pension fund on retirement will be €200,000 – anything over this amount will be taxed at the standard income tax rate of 20% up to €575,000 and at the taxpayer’s marginal rate above this amount
UNIVERSAL SOCIAL CHARGE
A group of coalition backbenchers wants the Government to close a loophole that allows a group of high earners to benefit from the new universal social charge and Brian Lenihan has agreed to meet them on the issue, The Sunday Business Post reports.
BUSINESS EXPANSION SCHEME (EMPLOYMENT & INVESTMENT INCENTIVE)
Beauty is obviously in the eye of the beholder. The glass can be half full or half empty. Ditto the reaction to the reinvention of the Business Expansion Scheme (BES) into the Employment and Investment Incentive.
BOMBASTIC COMMENT
You can always rely on The Sunday Independent for a bit of bombast. And, on the week that’s in it, who better than Shane Ross to deliver the coup de grace judgment on Budget 2011?
LIGHT TAX RELIEF
Finally, a bit of good news that has nothing to do with the Budget … just keep it to yourself or it is bound to become a casualty in Budget 2012!
BUDGET SUMMARY
The Noone Casey Budget Summary is available for download
Do not hesitate to contact Anthony Casey with any tax or budget queries.
37.9% OF EARNERS STILL OUTSIDE OF TAX NET
This table shows the reduction in the number of earners from 43.9% to 37.9% who were outside the tax net but have now been caught by the reduced thresholds and credits. In addition 18.1% (up from 14.3%) are now subject to the higher rate.
| % of taxpayers in relevant tax bands | |||||
| No tax |
Standard rate | Higher rate | |||
| Pre Budget | 43.90% | 41.80% | 14.30% | ||
| Post Budget | 37.90% | 44% | 18.10% | ||
EFFECTIVE TAX RATES FOR SELF EMPLOYED EARNIING €100,000
This table shows the effective tax rate for self employed earning €100,000 pa. Again we note this is the highest tax take since 1999.
| Effective rate of tax | Self employed based on €100,000 | ||||
| Single | Married, 1 income | ||||
| No Children | 2 Children | ||||
| 2001 | 40.0% | 35.3% | |||
| 2002 | 39.3% | 35.1% | |||
| 2003 | 39.3% | 35.1% | |||
| 2004 | 39.3% | 35.1% | |||
| 2005 | 39.0% | 34.6% | |||
| 2006 | 38.3% | 34.0% | |||
| 2007 | 37.1% | 32.7% | |||
| 2008 | 36.7% | 32.1% | |||
| 2009 | 37.5% | 32.9% | |||
| 2010 | 41.3% | 36.7% | |||
| 2011 | 42.8% | 38.4% | |||
EFFECTIVE TAX RATES FOR THE SELF EMPLOYED
The following table sets out the effective tax rates for self employed tax payers earning €60,000 pa. The effective tax rate is the highest in 10 years…
| Effective rate of tax | Self employed based on €60,000 | ||||
| Single | Married, 1 income | ||||
| No Children | 2 Children | ||||
| 2001 | 35.4% | 27.6% | |||
| 2002 | 34.2% | 27.1% | |||
| 2003 | 34.2% | 27.1% | |||
| 2004 | 34.2% | 27.1% | |||
| 2005 | 33.6% | 26.4% | |||
| 2006 | 32.6% | 25.3% | |||
| 2007 | 31.2% | 23.8% | |||
| 2008 | 30.6% | 22.9% | |||
| 2009 | 31.2% | 23.5% | |||
| 2010 | 34.2% | 26.5% | |||
| 2011 | 36.6% | 29.4% | |||
% CHANGES TO NET INCOME-SINGLE SELF EMPLOYED
Self employed single people who have relatively low earnings have been hit hard by the Budget. However high earners have got off lightly with the increased tax take reducing the higher the earnings!
| Gross income | Total change | Change as % | ||||
| pa | of Net income | |||||
| 10,000 | – 480 | -5.3% | ||||
| 15,000 | – 729 | -5.8% | ||||
| 25,000 | – 999 | -5.2% | ||||
| 35,000 | – 220 | -0.9% | ||||
| 45,000 | – 1,155 | -3.8% | ||||
| 55,000 | – 1,355 | -3.9% | ||||
| 75,000 | – 1,755 | -4.0% | ||||
| 100,000 | – 1,506 | -2.7% | ||||
| 125,000 | – 1,256 | -1.9% | ||||
| 150,000 | – 1,006 | -1.3% | ||||
| 175,000 | – 755 | -0.9% | ||||
% CHANGES TO NET INCOME- SINGLE PERSON
The following table shows the net change for a single person based on gross earnings as indicated.
Interestingly, a single person earning €35,000 per annum only suffers a change of €4 per week, less than 1% of existing net salary.
| Gross income | Total change | Change as % | ||||
| pa | of Net income | |||||
| 10,000 | – 200 | -2.1% | ||||
| 15,000 | – 399 | -2.8% | ||||
| 25,000 | – 989 | -4.6% | ||||
| 35,000 | – 218 | -0.8% | ||||
| 45,000 | – 1,101 | -3.4% | ||||
| 55,000 | – 1,249 | -3.4% | ||||
| 75,000 | – 1,545 | -3.4% | ||||
| 100,000 | – 1,934 | -3.4% | ||||
| 125,000 | – 2,463 | -3.6% | ||||
| 150,000 | – 3,013 | -3.7% | ||||
| 175,000 | – 3,567 | -3.9% | ||||
BUDGET 2011 DEPT OF FINANCE DOCUMENTS
Budget 2011 documents (published on 7th of December 2010) are available below. They are also available in a range of formats.
Files are available for download here.
- Financial Statement (Minister’s speech) (Online) – PDF Download
- Summary of 2011 Budget Measures – Policy Changes (PDF)
- Coimriú ar Bhearta Buiséid 2011 Athruithe Beartais (PDF)
- Annexes to the Summary of 2011 Budget Measures (PDF)
- Economic and Fiscal Outlook (PDF)
- Estimates of Receipts and Expenditure for the Year ending 31 December 2011 (PDF)
- Meastacháin Fáltas agus Caiteachais don Bhliain dar críoch 31 Nollaig 2011 (PDF)
- Financial Resolutions (PDF)
- 2011 Estimates for Public Services and Summary Public Capital Programme (PDF)
- Budget 2011 Leaflet (PDF)