News & Events

The National Recovery Plan 2011 - 2014
[ 26/11/2010 ]

Personal Tax
The Plan envisages that the marginal personal tax rates will remain at current levels until at least 2014. However, the Plan does not specify how the overall margin may be composed. There is an implied reduction of €6,000 in the Standard Rate band to €30,400 (single person) between 2011 and 2014. The entry point to income tax for a single PAYE person will fall to €15,300 approximately by 2014, a fall from €18,300 in the 2010 tax year. The net pay for a single person on €55,000 will be reduced by 4.8% by 2014 and the net pay for a married couple with one income on €55,000 will be reduced by 5.4%.  

Business Tax
It has been confirmed that the Corporation Tax rate of 12.5% will stay in place. The Patent Royalties exemption is to be abolished from 2011. The Plan abolishes the tax exemption for payments to National Cooperative Farm Relief Services Limited. Subject to European approval, the Government has decided to transform the BES Scheme and introduce the Business Investments Targeting Employment Scheme (BITES) which will be a much more focused scheme. 

Pensions
The annual earnings cap is moving from €150,000 per annum to €115,000 in 2011. Relief against PRSI and Health Levy on pension contributions is being removed from 2011. Tax-free payments in excess of €200,000 will be taxed from 2011 (tax rate has not yet been announced). Tax relief on pension contributions will remain at 41% in 2011. This is good news for the industry as it means pension contributions for the 2010 and 2011 tax years will still attract higher tax relief. 
It is proposed to reduce pension tax relief from 41% to 20%, on a phased basis, from 2012 to 2014. The Standard Fund Threshold may be reduced, though no specific detail is given. 

Capital Taxes
The current single tax rate systems for Capital Gains Tax and Capital Acquisitions Tax will be replaced with a system of increasing rates for different levels of gains and gifts. It appears that the current rate of 25% will remain for 2011. Reliefs and exemptions from CGT, CAT and stamp duty will be either abolished or greatly restricted. 

Property Taxes
Property tax will be introduced in 2012 at about €100 per annum initially. In 2013, households and site owners will pay a new site value tax which will apply to all households and all zoned land based on the value or size of the property. Water charges will be introduced by 2014 following a national project to install water meters at all domestic residences.

VAT
The Standard Rate of VAT will increase from 21% to 22% from January 1st 2013 and to 23% from 1st January 2014. The reduced VAT rate will remain unchanged.