Budget 2017: What Does It Mean For Families?
What does Budget 2017 mean for you?
Trish Kelly, eumom Finance Expert and Director of BabyStepsForYou.com, gives us the lowdown on Budget 2017.
Budget 2017 has arrived. By and large, this was a neutral budget with some benefit for all with modest tax reductions and social welfare increases. It neither took too much nor gave too much back, however, in the context of the last 8 years of austerity it is a welcome step, in the right direction. There is the rational that it was not a more generous budget, due to the government being extra cautious ahead of possible negative economic consequences of Brexit
The Key Pointers For Budget 2017:
- 2% reduction in DIRT rate for 2017 which is to be an ongoing reduction until 2020.
- 0.5% reduction in lower USC rates will deliver additional net income of up to €353 pa
- Incomes of €13,000 or less are exempt. Otherwise,
- €0 to €12,012 @ 0.5%
- €12,013 to €18,772 @ 2.5%
- €18,773 to €70,044 @ 5%
- €70,045 to €100,000 @ 8%
- PAYE income in excess of €100,000 @ 8%
- Self-employed income in excess of €100,000 @ 11%
Changes to the Inheritance Tax-free Thresholds:
Key Points on Pensions:
- The Group A lifetime tax-free threshold applying to gifts and inheritances from parents to children is being raised from €280,000 to €310,000.
- The Group B lifetime tax-free threshold applying to gifts and inheritances made to parents, siblings, nieces, nephews or grandchildren is being raised from €30,150 to €32,500.
- The Group C lifetime tax-free threshold applying to gifts and inheritances made to all others (except spouses and civil partners who are exempt) is being raised from €15,075 to €16,250.
Families, Take Note:
- No change to the marginal rate income tax relief on pension contributions
- No change to the tax exemption that applies on pension investment income
- No change to retirement lump sum options or €200,000 tax free lump sum threshold
- No change to the AMRF limit of €63,500 or guaranteed income requirement of €12,700
If you were thinking of accessing deposits to pay for college fees or other expenses, you should hold off until the New Year and consider only accessing money when needed as the reduction in dirt tax will save you money on your deposit interest. Also of interest are the widening bands of inheritance tax thresholds which will save tax on the passing on of assets in the future. You should also consider diverting any tax savings from the USC reduction into your pension be it even a small amount each month. Finally, pension investments remain one of the most tax efficient ways of investing your money for the future.
Don’t leave it too late to plan! For further information please visit babystepsforyou.com or call our office at 01 6279495 where myself or a member of our team would be delighted to talk to you.