| | | | | | | | | | | TAX PLANNING TIPS
| | | | Budget 2012 Some of the changes that will effect business | | | VAT
The standard rate of VAT will increase from 21% to 23% with effect from 1 January 2012. The Minister indicated a commitment by the Government not to raise the standard rate of VAT beyond 23% during its lifetime.
Universal Social Charge
The Universal Social Charge, introduced by last years Budget, has seen an increase in the exemption limit from 4,004 to 10,036. As announced by Revenue earlier in the year the Universal Social Charge will now move to a cumulative system in line with the PAYE system.
PRSI
There is to be a broadening of the base for PRSI to encapsulate rental, investment and other forms of income. This will apply from 2013. The PRSI base will also be broadened through the removal of the remaining 50% employer PRSI relief on pension contributions.
DIRT
The rate of DIRT on ordinary deposit accounts will increase by 3% to 30%. The rate of retention tax that applies to life assurance policies and investment funds will increase by 3% to 30% on payments made annually (or more frequently) and to 33% for payments made less frequently than annually (including deemed payments).
Capital Gains Tax
The current rate of capital gains tax is being increased from 25% to 30% in respect of disposals made on or after 7 December 2011. The current system of capital gains tax retirement relief is being amended. Full relief from capital gains tax will continue to apply for an intra family transfer of certain business and farming assets where the individual making the transfer is aged 55 to 66. Where the individual making the transfer is over 66, an upper limit of 3 million on retirement relief will be imposed. This is subject to a 2 year transitional period for individuals who are currently aged 66 or who reach that age before 31 December 2013 in whose case no upper limit should apply. It is hoped that the announcement will lead to an earlier transfer of businesses/farms to the next generation.
Disposals of certain business/farming assets to non family members will continue to be subject to the existing exempt limit amount of 750,000. This is subject to the proviso that the transfer is made by an individual aged between 55 and 66 years of age. Where the transfer is made by an individual over 66 years of age then the 750,000 limit is reduced to 500,000. Again this is subject to a 2 years transitional period for individuals who are currently aged 66 or who reach that age before 31 December 2013 in whose case the 750,000 limit should apply.
Full details of the changes to retirement relief will be announced in the Finance Bill.
Redundancy Rebate
From January 2012, the employer rebate on statutory redundancy payments will reduce from 60% to 15%.
Stamp Duty Commercial Property
Stamp duty on non-residential property (including farmland as well as commercial and industrial buildings) is being reduced from the current top rate of 6% to a flat rate of 2%. The reduced 2% rate will apply to instruments executed after 6 December 2011.
Consanguinity relief will continue to apply to transfers of non-residential properties for intra-family transfers until the end of 2014.
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