Budget 2018

Income tax

The standard rate income tax band for all earners is increasing by €750. This means, for example, an increase from €33,800 to €34,550 for single individuals and from €42,800 to €43,550 for married one earner couples.

The Home Carer Tax Credit will increase from €1,100 to €1,200.

The Earned Income Credit will increase from €950 to €1,150. This is relevant for taxpayers earning self-employed trading or professional income in certain cases and for business owner/managers who are ineligible for a PAYE credit on their salary income.

Mortgage interest relief is being extended for remaining recipients (owner occupiers who took out qualifying mortgages between 2004 and 2012) on a tapered basis. 75% of the existing 2017 relief will be continued into 2018, 50% into 2019 and 25% into 2020. The relief will cease entirely from 2021.

Universal Social Charge (USC)

Incomes of €13,000 or less will continue to be exempt from USC in 2018. Once your income is over this limit, you will pay the relevant rate of USC on all of your income as follows:

  • €0 to €12,012 @ 0.5%
  • €12,012 to €19,372 @ 2%
  • €19,372 to €70,044 @ 4.75%
  • €70,044+ @ 8%

Medical card holders and individuals aged 70 years and older whose aggregate income does not exceed €60,000 will now pay a maximum USC rate of 2%.

Excise Duties

Tobacco Products Tax

The excise duty on a packet of 20 cigarettes is being increased by 50 cents (including VAT) with a pro-rata increase on the other tobacco products, and an additional 25c on roll your own tobacco. This will take effect from midnight on 10 October 2017.

Sugar Tax

A tax on sugar sweetened drinks is to be introduced on 1 April 2018. The tax will apply to sugar sweetened drinks with a sugar content between 5 grams and 8 grams per 100ml at a rate of 20c per litre. A second rate will apply for drinks with a sugar content of 8 grams or above at 30c per litre.

Benefit in Kind on Electric Vehicles

A 0% benefit-in-kind (BIK) rate is being introduced for electric vehicles for a period of 1 year. This will allow for a comprehensive review of benefit in kind on vehicles which will inform decisions for the next Budget. Electricity used in the workplace for charging vehicles will also be exempt from benefit-in-kind.

Key Employee Engagement Programme (KEEP)

An incentive is being introduced to facilitate the use of share-based remuneration by small and medium-sized enterprises (SMEs) to attract key employees. Gains arising to employees on the exercise of KEEP share options will be liable to Capital Gains Tax on disposal of the shares, in place of the current liability to income tax, Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) on exercise. This incentive will be available for qualifying share options granted between 1 January 2018 and 31 December 2023.

Earned Income Tax Credit

The Earned Income Tax Credit will increase from €950 to €1,150. This is relevant for taxpayers earning self-employed trading or professional income in certain cases and for business owner/managers who are ineligible for a Pay As You Earn (PAYE) credit on their salary income.

Stamp Duty

The rate of Stamp Duty on non-residential property increased from 2% to 6% from midnight on 10 October 2017.

A new scheme is being introduced to refund stamp duty on property transactions in respect of commercial land bought for the development of housing. To avail of the refund scheme, developers will have to start the relevant development within 30 months of buying the land.

Consanguinity stamp duty relief for family farm transfers is being maintained at 1% for a further 3 years.

The exemption for young trained farmers from stamp duty on agricultural land transactions continues.