What does it all mean for you?
The budget was a big build up with nothing really new or exciting. Here is a wee summary.
Income Tax decrease
As was talked about over the past few weeks Budget 2019 saw some income tax decreases, sounds great but don’t start planning to spend the savings just yet, you wouldn’t be seeing a huge increase in their take home pay.
The much loved (not) Universal Social Charge (USC) has seen a rate cut of 0.25% to 4.50%.
The threshold at which people hit the new 4.50% rate of USC will increase from €19,372 to €19,874.
The point at which people move into the higher 40% rate of income tax will also rise by €750 to €35,300.
The threshold will rise from €43,550 to €44,250 for married one-earner couples.
The earned income tax credit for the self-employed will increase by another €200 to €1,350.
The minimum wage will increase to €9.80 an hour from next year.
So, what does it all mean?
Ultimately the result of these changes should see an extra €200 to €300 in your take home pay next year.
However, with wage increases running at around 2 to 3% currently, the 2.17% increase to the standard rate tax band means more people will end up paying tax at the higher rate next year.
The excise on cigarettes has gone up by €0.50 again, bringing the price of a pack of 20 cigarettes up to around €12.70. However, excise duty on alcohol and petrol and diesel has remained unchanged once again this year.
Social Welfare increased by €5.
All payments will increase by €5 from next March, with the Christmas bonus being restored to 100% for the first time since the crash.
The home carer credit will rise by €300 to €1,500.
€25 increase in both the Back to School Clothing and Footwear Allowance rates.
A new paid parental leave scheme will be introduced in November 2019 to provide an extra two weeks' leave to every parent of a child in their first year, with the intention of increasing that to seven weeks over time.
PRSI for the self-employed is to be expanded to include jobseeker’s allowance.
On the health side
Prescription charges are to be reduced by €0.50 from €2.00 to €1.50 per item for medical card holders over the age of 70.
Drug Payment scheme threshold is to be reduced by €10 from €134 to €124 per month.
Free GP care is expected to be extended to 100,000 more people because of a €25 increase in the income threshold for the GP card. The threshold for a couple will rise by €45.
Tourism (a lot of noise around this one)
The tourist rate of VAT has been increased back to 13.5%. As well as applying to hotels, the reduced rate had also applied to services such as restaurants, newspapers, hairdressing, coffee shops, and cinema and concert tickets.
It remains to be seen whether the increase will be passed onto consumers in the form of higher prices. Some good news; the Government is keeping the rate at 9% for newspapers and sporting facilities and reducing it from 23% to 9% for electronic publications
The controversial local property tax was introduced in 2013 and is levied at a rate of 0.18% on the value of your house (within certain bands). Currently it is based on 2013 house prices and the idea was that the valuations – and thus the tax due – would be reviewed every three years. However, in the wake of a big jump in house prices, revaluations where deferred from 2016 until 2019. But with property prices continuing to increase, householders face a big increase in their bill next year unless the tax is changed.
As a result, the Government has committed to reforming this tax but very little new was said in yesterday’s budget with the minister simply reiterating that any changes to the tax will be moderate and appropriate.
Housing was unsurprisingly, a huge focus of the budget. The big announcements were:
The allocation of €1.25 billion for the delivery of 10,000 new social homes in 2019.
An extra €121 million for the Housing Assistance Payment (HAP) in 2019 to provide an additional 16,760 new tenancies.
€30 million is being provided next year for homelessness services, bringing the total allocation for such supports to €146 million in 2019.
Mortgage interest relief for landlords will rise to 100% from 1 January with the intention that it will put downward pressure on rents.
Allot of noise for nothing.
The ultimate result of these changes? Taxpayers should see an extra €200 to €300 in their take home pay next year, which could be wiped out if you are a home owner where the value has increase since 2013.
Happy to help