Budget 2020

Small increase in self-employed and home carer tax credits

The Earned Income tax credit provided to the self-employed and proprietary directors who cannot qualify for the PAYE tax credit, will be increased by €150 in 2020 to €1,500. This will mean a minor income tax saving of €150 p.a. for most self-employed and proprietary directors.

The home carer tax credit will be increased in 2020 to €1,600. This credit can be claimed by a married couple who are jointly assessed for income tax where one spouse works in the home caring for a dependent person, e.g. a child.

Increase in the child CAT Threshold

The CAT Threshold which applies to gifts and inheritances taken by children from their parent has been increased by €15,000 to €335,000 with effect from 9th October 2019. There is no change in the other Thresholds or in the CAT rate of 33%.

The maximum Inheritance Tax saving from the increase is €4,950.

No increase in State Pension

However, the Living Alone allowance will be increased by €5 pw from €9pw to €14 pw from March 2020.

In June 2018 the Revenue confirmed that the State Pension Christmas Bonus could, once received, be counted as income for the purposes of the €12,700 specified income test to avoid having to invest €63,500 of retirement funds in an AMRF or annuity or to unlock an AMRF already held.

Increase in Social Welfare rates for children

Social Welfare benefit rates are increased to €36 per week for under 12 and €40 per week for 12 and over.

Increase in employer’s PRSI rates

Because of a 0.1% increase in the National Training Fund Levy (which is collected with PRSI) the employer’s PRSI Class A rate will increase from its current 10.95% to 11.05% in 2020, for employees earning more than €386 pw. For lower earners, the employer’s PRSI Class A rate will increase from 8.7% to 8.8% in 2020.

Help to Buy scheme extended for another two years

The Help to Buy scheme gives a rebate of income tax paid over the previous 4 years to first time buyers of 5% of the purchase price/value of their new home up to €500,000, subject to a maximum rebate of €20,000 per property. The scheme only applies where the mortgage is at least 70% of the home value.

Increase in Stamp Duty for commercial property

The Stamp Duty rate payable on the purchase of non-residential property will be increased from its current 6% rate to 7.5% with effect from 9th October 2019. This will impact on pension investors investing in non-residential Irish property after 9th October 2019.