Budget Q&A

Submit your Budget 2014 questions to our panel of experts

Dominic Coyle & Conor Pope (IT), John Kelly (Pwc) Wed, Oct 16
 
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  • 09:35
    It's the day after Budget 2014 and as the dust settles, we're here to answer your questions about how it will affect you.
  • 09:38
    The Irish Times' Conor Pope and Dominic Coyle are being joined by John Kelly from pwc to answer your questions on everything from medical insurance tax relief to changes to pensions and medical cards.
  • 09:52
    If you want to submit your questions, you can do so at http://www.irishtimes.com/business/budget-2014/ask-the-experts, through the comments on the blog or by email to budget2014@irishtimes.com
  • 09:53
    Were there any changes to motor tax again? My tax has already risen by almost €100 since I bought my car five years ago.

    No changes have been announced to existing motor tax rates. JK
  • 09:57

    I have hunted high and low. Can someone please confirm what happened stamp duty? Presume it stayed same?

    Nope. Stamp duty has gone. It was replaced by the Property Tax which is why you were unable to find any mention of it in any of the Budget reports you have been reading.   CP

  • 09:59
    What's the situation with healthcare tax? I'm a mature student. My VHI policy was increased by 10% bringing me over €1k limit.

    Up until now tax relief of 20 per cent was available on health insurance premiumums. It will still be available but is being capped at €1,000. In this case you will still get the tax relief on the first thousand euro of your premium but not on the anything above that. The change will impact on you but not by very much. CP
  • 10:00
    Is there any change in the 3rd level student registration fee? 
     
    The student contribution charge for third-level institutions will increase by €250 to €2,750. JK
  • 10:04
    How do the changes to the contribution levy work ?  Is it now 0.75% in 2014 and 0.15% in 2015?
     
    Correct, the existing 0.6% levy will increase to 0.75% in 2014, but will then reduce to 0.15% in 2015. JK
  • 10:09
    Has the minister shed his plan to charge PRSI on rental and other unearned income in 2014?
     
    No, this change will still come into effect on 1 January 2014. As such, a Class A PRSI contributor (generally most employees) will now pay PRSI on unearned income, such as rental and investment income. The additional PRSI contributions will not grant any entitlement to additional social insurance benefits.  JK
  • 10:16
    How does the tax credit for home renovation apply? I plan to have work done that will total €9,000 (new windows and attic conversion). How/Will I benefit and what do I need to do?   

    There may well be more detail in the upcoming Finance Bill but the Minister set down that you will be able to claim relief on home renovations being undertaken next year or in 2015. The relief will be in the form of a tax credit against your income tax and will be set at 13.5 per cent. You will be able to claim it phased over the two years following the year in which the renovation work is carried out.
    He spoke of qualifying expenditure and, in his speech, noted that this included window-fitting, extensions and renovations. While he did not specifically mention attic conversions, I imagine that would come under extensions.
    The relief relates to renovation costs of between €5,000 and €30,000. Details of expenditure and claims for relief will have to be processed through the Revenue Commissioners by way of its Revenue Online Service (ROS).
    The Finance Bill putting this measure into law will have to be passed before the end of the year. At that point, or before, you should contact Revenue to get guidance on the precise protocols for applications. DC
  • 10:17
    We are due to begin a house extension shortly, next Monday and have been told by our builder today we should be fine to reclaim the vat as the work will be invoiced in 2014. Is this true or are we better off deferring the work to next year?
     
    This relates to the home renovation tax incentive scheme, announced by the Minister for Finance. According to the text of the Minister's speech, an income tax credit will be available to homeowners who carry out renovation and improvement works on their home properties in 2014 and 2015. Based on the speech, the relief would not appear to be available on works carried out in 2013, even if they are invoiced in 2014. The finer details of the relief will be announced in the upcoming Finance Bill. JK
  • 10:19
    I pay €3,250 per year for medical insurance for my family (myself, wife and two kids age three , one) How will the health insurance ceiling affect me
     
    Tax relief on the premiums will still be available up to €1,000 per adult and €500 per child. Therefore, you will still receive tax relief on premiums of up to €3,000 per annum, but not on the additional €250. JK
  • 10:26
    Has the €144.00 monthly prescription charge ceiling under the Drug Payment Scheme been increased in Budget 2014?

    No there has been no change made to the monthly prescription charge ceiling. However the cost of each prescription item has increased from €1.50 to €2.50. CP
  • 10:27
    My mother is 82. She is in receipt of an old age pension which consists of €240 per week state pension and €267.50 (gross) from my deceased fathers pension. She is concerned as i'm not 100% sure if she will lose her medical card. She is in receipt of an additional €10 because she is over 80 years of age, but this puts her entire gross income to €507.50 per week, just €7.50 over tghe €500 threshold. She has said herself that she would prefer to not have the additional €10 per week but hold onto her medical card (as she is on a lot of medication). 

    My question is, will she definitely lose her medical card?

     
    Based on Minister Howlin's speech yesterday, your mother would appear to lose her entitlement to a full Medical Card, as her gross income exceeds €500 per week. However, she may still be in a position to apply for an "ordinary" Medical Card or a GP Visit Card if she has high medical expenses. JK
  • 10:32
    Will my medical insurance cost more in premium?

    That depends. The Government will has put a cap on the tax relief which will be available. You will only be able to claim tax relief on a maximum of €1,000 for an adult and €500 for a child. If your premium is above that ceiling – as many are – then you are likely to have slightly less money next year.  CP
  • 10:35
    Please could you explain the dirt tax to me. I don't know if my savings will be taxed not that i have a fortune but it's my money that I have already paid tax on through USC etc... I dont have a pension plan so I have been saving my money for the future, will I have to go back to my grandparents' day and start putting it under the mattress?

    You may have paid income tax, universal social charge, PRSI etc on your money before you ever get to putting it into the bank but that would not save you from DIRT.

    DIRT (Deposit Interest Retention Tax to give it its full name) is deducted at source. At present, the rate of DIRT is 33 per cent – i.e. a third of your headline interest income on the savings. Following the Budget that figure will now rise to 41 per cent from the start of 2014.

    Worse still, from the start of next year, the Government is also levying PRSI on deposit interest (as it announced in last year’s budget).

    You say you don’t have a pension. I’d look at starting one if you can. You don’t need to be in employment to do so, although obviously the tax relief on pension contributions only kicks in if you are earning taxable income. But pension returns should outdo bank deposit interest over the long run. Clearly either option, even with current paltry bank interest rates will do better than the mattress option. DC
  • 10:36
    What does the maternity cuts mean to me? I am a teacher due to go on Maternity leave on 1st December.
     
    The payment rate of maternity benefit will be reduced to €230 per week for new claimants from January 2014. As you are going on maternity leave in 2013, you will still be entitled to claim the current weekly maximum payment rate of €262 (assuming that you meet all conditions required to claim the maximum payment rate). JK
  • 10:37
    With the pension levy increasing to 0.75% for 2014. As a public servant does that mean my take home pay will reduce further in 2014?

    It’s been a rough time on public sector pay in recent years but, for you, the good news is that this particular pension levy (or, more accurately, levies in 2014) will not affect you. The 0.6 per cent pension levy which is entering its fourth and last year in 2014 is applicable only to private sector pension funds. The same will be true for the 0.15 per cent levy which is coming in next year, for at least two years. DC
  • 10:38
    My property is valued at €175,000. I was told the L.P.T for 2014 would be €315 on that valuation for the full year, what will I pay now for 2014 with the new budget.  

    There have been no changes to LPT rates for 2014, so your liability will remain at €315 for the full year. JK
  • 10:45
    I am in receipt of Jobseekers Allowance. I'm 24 and will be 25 in May 2014. I receive the full rate of €188 currently.I find the age-related Jobseekers Allowance changes confusing. Will the changes in the budget affect me and will my payment be reduced to €144?
     
    The reduced rate of €144 will apply to existing recipients who reach 25 from January 2014, therefore it appears that your payment will be reduced to €144. We're awaiting further clarification on it, however. JK
  • 10:50
    I was laid off this year and received a lump sum which would entitle me to Top Slicing relief. I am due to reclaim this next year as it relates to the previous three years. is my entitlement abolished with the budget -  Martin

    Top slicing relief expires from January 1st but it is not clear, given that your severance payment is in 2013, whether you come under the existing regime or the new one. I have put your specific point to Revenue and expect an answer later this morning. I will update the situation then. If you do not hear from me, please feel free to get in touch at dcoyle@irishtimes.com. DC
  • 11:05
    If you took a redundancy in 2013 and are due top slicing back in 2014,do you now lose it.
     
    Top slicing relief is available on lump sums of less than €200,000 that are paid on or after 1 January 2013, therefore, if the redundancy payment was made in 2013,  you are likely to still qualify for top slicing relief. Full details will appear in the upcoming Finance Bill. JK
  • 11:10
    Cathal Are you sure stamp duty on property is gone? It's not mentioned in any of the Budget policy books and it would be quite a cost to get rid of it?
  • 11:16
    Dominic CP state at 9.57 that stamp duty is gone - Is this correct? I understood it still applied on property purchase
  • 11:16
    You're correct Cathal and Dominic - stamp duty still applies to house and apartment purchases. The rates haven't changed as far as we're aware for residential property, at 1 per cent up to €1 million and 2 per cent over that. COB
  • 11:18
    I'm due to go on maternity leave in February. Will my benefits be affected?

    It depends on which rate you were set to be on. If you were on the lower rate of €217 per week then you will see your entitlement climb to €230 a week. If however you were on the higher rate of €262 – as 90 per cent of new mothers have qualified for – then you will see your entitlement fall by €232. This couple with the decision last year to tax the allowance will mean you will be €140 a week worse off than would have been the case if you took the leave three years ago. CP

    Does the apparent abolition of stamp duty come into immediate effect or is it from 1st January 2014? Jonathan

    The abolition of the 1 per cent stamp duty on share transfers for smaller listed companies on the Enterprise Securities Market (ESM) of the Irish Stock Exchange will only come into force under a commencement order from the Minister. This makes its timing uncertain. It will certainly not happen before the Finance Bill is passed later this year and, most likely, not before January 1st. However it could be later again.DC
  • 11:19
    We pay €3600 to VHI annually how does the tax change affect us and how much will it cost us. Noreen 

    It is difficult to answer the question without knowing whether the payment is gross or net of tax relief and the size of the family for which the payment is made. In simple terms, VHI medical insurance payments qualify for tax relief at a rate of 20% on the gross premium (e.g. a €4,000 gross premium would attract tax relief of €800, resulting in a net payment of €3,200).
     
    The amount of the gross premium that qualifies for relief will now be restricted to €1,000 per adult and €500 per child. For example, taking a family of two adults and two children into account, the relief will be restricted to a gross premium of €3,000. If a gross premium of €4,000 is made in respect of this family, the excess €1,000 will not now qualify for tax relief at 20%, resulting in an increased payment of €200. JK
  • 11:22
    I'm divorced from my wife, we live separately. Now both of us claim the one parent family tax credit. In the budget, it seems that only one of us will be able to claim that tax. It is said that primary care. But both of us take care of children; the children are one week with me, one week with my ex wife. Will we be able to choose which one of us will claim the tax? My income is a much higher than my ex wife, I have 48k gross and she 19k gross. Will we be able maybe to split the tax credit between us? Dariusz

    The Minister has yet to outline the precise details of how this will work – expect more information in the Finance Bill – but what seems clear is that only one parent will be able to claim the credit. Determining the principal carer in a situation, like yours, where parents share childcare more or less equally has not been considered but I expect that it will be up to the two of you (or the Department in the event of a dispute)  to elect which one receives the payment. DC
  • 11:23
    Does the tax incentive for home renovation come into effect immediately, I'm changing my kitchen costing up to 35k will I get tax back on this?

    Jacinta,

    No it doesn’t. It comes into effect next year for two years. It’s not even clear yet exactly what will be considered as “qualifying works”. New kitchens weren’t mentioned yesterday by the minister though extensions, new windows, plastering, plumbing and tiling were.
    You will have to apply to the Revenue for relief, though it is not yet clear whether this must be done before commencing the work or not. Revenue will also require details of expenditure before sanctioning relief.
    If you’re undertaking a renovation project this year, it won’t qualify. In any case, the qualifying expenditure is between €5,000 and €30,000. It is not clear at the moment if this portion of spending on projects costing more will qualify or not. DC
  • 11:25
    Has DIRT tax to be paid by all, pensioners included? Brendan
     
    A new DIRT rate of 41% will apply from 2014. There are no changes to the group of individuals who are currently exempt from DIRT, including individuals aged over 65 years of age.
  • 11:31
    What is the 2014 rate of CGT and CAT post the budget announcement? Eric

    Eric,

    Rates and thresholds for both CAT and CGT remain the same after yesterdays’ Budget – at 33 per cent. DC
  • 11:33
    Is there a definition on what constitutes "renovation' for the 13.5% tax credit? e.g. does it iclude window replacement and insulation? Mairead

    Mairéad,

    There is, as yet, no comprehensive definition of “qualifying works” under the new Home Renovation Incentive. I’d expect that will come in the Finance Bill (the legislation enacting budget measures) which is due to be published within weeks.
    For what it is worth, in his speech the Minister referred to “extensions and renovations to the home, window-fitting, plumbing, tiling and plastering”.
    The other important issue to remember is that it applies only to your home, or principal private residence. DC
  • 11:42
    My annual income is comprised of Rental Income and Deposit Interest subject to DIRT the combined total of which does not exceed the 20% band of €32,800. Why is it that a particular category of my income is now taxed at 41% despite the band limit? Is this constitutional?  John

    John,

    I don’t see how constitutionality comes into it. DIRT has always been a strange beast. For instance, people are obliged to notify revenue of income won which tax may already have been paid elsewhere but which might be taxed also by the Revenue – especially if tax to date is below their marginal rate. However, DIRT was always seen as full and final tax due on bank savings.
    The reason that particular category of your income is now taxed at 41 per cent is that the Government has decided it needs to increase consumer spending and one way of doing that is by discouraging saving. DC
  • 11:42
    Shane Was there any detail regarding when the Rennovation tax credit applies from ? for example if you are rennovating now, would that be covered
  • 11:47
    Do existing medical card holders (over 70s) keep their cards until they expire or will they be subjected to the new means restrictions immediately. In our case we have just been reassessed and have just received our full medical cards in force until 2017. It seems that under the new limits we will not qualify...but do we keep our cards.

    We have prescriptions monthly costs in the region of €500. So this is a huge worry. George


    George,
    The full details have not yet been published but it appears that existing medical card holders will not keep their cards until they expire.
    In his briefing on the details of the health measures in the budget, Minister James Reilly said legislation to lower the income threshold on medical cards would be put in place later this year or in early 2014 … “with reassessments beginning after the legislation is in place”
    That would appear to indicate a fast-tracking of the process rather than waiting for the next renewal dates on cards, although this is not certain.
    Minister Reilly said the department expects to save €25 million next year under the measure. DC
  • 11:48
    I am in my 60s and inherited a property in the late 1990s. The property is not my principal private residence. I am considering transferring ownership of the inherited property to one of my kids. As I have been in ownership of the property for over seven years will I be exempt from CGT if I transfer the property next year. Cillian
     
    This relief from CGT originally applied to property acquired between 7 December 2011 and 31 December 2013 and which is owned by the same person for a period of at least 7 years. Budget 2014 extends the purchase period to 31 December 2014.
    Unfortunately, as you did not acquire the property between these dates, you are not in a position to claim the relief.
  • 11:59
    Has the rate for Back to Education Allowance changed? or is it still equal to the individual's current rate of Jobseekers Allowance? RM
     
    The Back to Education Allowance rate has not been changed. JK
  • 12:00
    Vhi plan B with options - how will I be affected, I am an old age pensioner. Maria

    VHI Plan B with Options is now called VHI Helathplus Extra. The cost per adult on this plan is currently €1837 per annum. Assuming the price of the plan stayed the same, following the Budget where you will now get tax relief at 20 per cent on only the first €1,000 of this, the “net” cost to you will be €1,637.
    Before the Budget, when the full premium was subject to relief, the net cost this year would have been €1,469.60. So the difference to you on the basis of this year’s premium would be €167.40.
    As the measure only kicks in next year, we will have to see how premiums move. DC
  • 12:00
    I receive €30 per week Mortage Interest Supplement. I am on Disability Allowance. Has the mortage supplement been abolished? When will this happen?
     
    There have been no changes to the Mortgage Interest Supplement. JK
  • 12:05
    Does the new 41% dirt tax rate on exit of Life Assurance and investments start now or in January and does it apply if you surrender your Life Assurance? Ger

    Ger,
    The 41 per cent exit tax rate on life policies applies from January 1st next. DC
  • 12:06
    What does it mean about exit tax on life assurance policies?
     
    A new 41% exit tax rate will apply. JK
  • 12:07
    I was laid off this year and received a lump sum which would entitle me to Top Slicing relief. I am due to reclaim this next year as it relates to the previous three years. is my entitlement abolished with the budget. Martin

    Martin,

    Coming back to you as promised. Revenue assures me that top slicing relief is being abolished for payments made on or after January 1st, 2014 “so he’ll still be eligible for top slicing since his payment is being made this year”.
    Hope that clarifies it positively for you. DC
  • 12:10
    The minister announced yesterday that people setting up a new business wouldn't have to pay income tax for 2 years. Does this apply to employees that get work and how does it operate?

    The Minister announced a new "Start Your Own Business" scheme to assist individuals who have been unemployed for at least 15 months to start their own unincorporated businesses. As you note, the scheme provides an income tax exemption for two years. Full details of the scheme will be published in the upcoming Finance Bill, however, the scheme is aimed at encouraging unemployed individual to start up their own businesses. JK
  • 12:18
    Under the new enterprise creation scheme for those unemployed for 15 months, does the income tax exemption for 2 years include USC and PRSI Eddie Gallen
     
    From the documents published yesterday, it appears that the relief is restricted to income tax only, subject to a maximum of €40,000 per annum. JK
  • 13:04
    Does the Top slicing abolition only apply to severance payments after January 2014. I left my job in May this year and will be applying for top slice relief in January 2014
     
    Top slicing relif will no longer be available from 1 January 2014 in respect of all ex-gratia severance payments. It appears that the relief will still be available in respect of severance payments made in 2013 (where the payment is lower than €200,000) notwithstanding the the claim is made in 2014.  However, this is subject to confirmation in the upcoming Finance Bill. JK
  • 13:30
    We'll still keep answering questions throughout the day - working our way through a backlog at the moment!
  • 13:56
    I am a single mother of two young children. The children live with me on a full time basis, have weekend day visits to their father. With the new single parent tax now only available to one parent how do I go about securing that for myself.  H

    The one parent family tax credit was operated through the Revenue Commissioners and the same will be the case with its replacement. However, beyond that, it is impossible to draw conclusions from one to the other.
    Where the children live full-time with you, clearly you are the party entitled to the credit?
    I have asked Revenue if they have any clarity on application procedure, whether the credit can be split between parents and the process for resolving disputes but it is likely to be a little while before comprehensive answers emerge.
    In the meantime, you should certainly contact your tax office to register your entitlement – if only to ensure they get back to you when the measure is properly enacted under the forthcoming Finance Bill. DC
  • 14:42
    Keith Re: house refurbishment - "Based on the speech, the relief would not appear to be available on works carried out in 2013, even if they are invoiced in 2014. " "The work must commence on or after 1 January 2014" - from BUDGET SUMMARY 2014
  • 16:39
    Is there a limit to the amount a person will pay for medication.?My husband is using 19 different lots of medication.At the moment we pay 19.95euro.per month.  At €2.50 an item this should increase to €47.50. Is this correct? Anne

    the monthly cap for prescription charges will rise from €19.50 per month to €25 per month per person or family. The new charges are expected to come in from December 1st. COB
  • 16:40
    Very concerned single person non principal child carer The relationship between the 25m gain from scrapping the One-Parent Family Tax Credit and the hit the individuals in the effected group are taking is massively disproportionate, totally inequitable and democratically unjust.
  • 17:30
    Tom I have a joint account with my wife, will I have to pay PRSI on this, or am I better letting her have it in her name, as she is not in the tax system, she is at home with the kids
  • 17:30
    marym how will government get extra 4% prsi on savings from non paye employees.will banks deduct it? or will it be deducted from personal pensions?
  • 17:32
    Regarding the PRSI on interest earned on savings, it is not yet clear how Revenue plans to collect this. The general thinking is that it will either be deducted at source or people will be required to file a tax return declaring the income. Until we have more detail we can't say for sure, but it's unlikely that anyone will escape this particular measure.
  • 17:42
    It seems to me that Irish Times is the only media outlet reporting that visits to a GP are free for children 5 YEARS AND UNDER. All other media sources are reporting UNDER 5 YEARS! Which is correct, please. Thank you. J

    Why we are, of course. The line from the Department of Health briefing is…

    “Approximately 240,000 children aged 5 and under will be able to access a GP service without paying a fee at the point of use. This is about 57% of the total population of children in this age group. 43% are already covered by the medical card or GP visit card.” (my emphasis)

    Hope that clarifies it. Thanks, D
  • 17:47
    Andy Hi, Im a single parent, both myself and my ex partner share custody of our son, he resides with both of us week on week off, I am the only one working between the two of us, I am the only one working so am I primary carer?
  • 17:48
    As mentioned below, it's impossible to draw conclusions just yet. We have asked Revenue for clarity on application procedure, whether the credit can be split between parents and the process for resolving disputes but it is likely to be a little while before comprehensive answers emerge.