THE MOTHER OF ALL BUDGETS
Not long to go now but there is still time to offset the taxing effects likely to be coming down the tracks on that Mother Of All Budgets in December, according to The Sunday Times.
Personal Finance Editor Niall Brady calculates taxpayers will take a €850m hit if income tax rises from 20% to 21% and the top rate goes up from 41% to 43%. Earners will lose another €500m if the personal tax credit is lowered from €1,830 to €1,530. Lump in likely increases to PRSI and cuts in benefits that could include child, pension and welfare entitlements.
Brady outlines some of the ways his readers can help minimise the potential impact including:
- Maximising pension benefits
- Pocket interest now
- Check your mortgage interest
- Give generously
- Pay pensions through your company
- Consider marriage
No matter what happens in the Budget, there is another year to make pension contributions that qualify under current rules. Taxpayers can choose to have contributions paid before October 31, 2011 backdated against 2010 income, to ensure top-rate tax relief as well as reliefs from PRSI and the health levy.
Other salient advice includes adding your spouse to any claim for mortgage interest relief on your home if you happened to own it as an individual prior to taking the plunge. Apparently, your spouse can get first-time buyer allowance for seven years from the date you start to claim – even if your own entitlement has run out. And if this isn’t enough to persuade you to tie the knot, the tax code also favours marriage in a big way.
If a man earns €45,000 and his girlfriend earns €27,400, they would have a combined tax bill of €16,450 before credits. If they were to marry, that bill would fall to €14,560 – a saving of €1,890.