Budget 2015 - Financial Advice for 2015
Please find below a quick summary of the main points from Budget 2015 -Pension levy to reduce to 0.15% for 2015 and then end.
The Minister has confirmed the commitment from last year to reduce the pension levy to 0.15% in 2015. The levy will effectively end at the 30th June 2015, i.e. the last valuation date for payment of the levy in 2015. Those who mature their pension benefits before this date will avoid the levy applying to their funds in 2015.
Reduction in the top rate of income tax from 41% to 40%Clients should maximise their personal and AVC pension contributions for 2014, and backdating to 2013, to benefit from 41% relief.
Increased USC rate of 8% on income over €70,044 will negate the benefit of the income tax reduction from 41% to 40% for such higher earners, and reduce the relief on personal pension contributions by about 2%.
The combination of the reduction in the top rate of income tax at which pension contributions may be offset from 40% to 41% and the increase of 1% in the top rate of USC at which such pensions are not deductible means an approximate 2% reduction in the level of relief available on such contributions for higher earners in 2015. This again emphasises the benefit of maximising pension tax relief in 2014 and 2013.
Capital Gains Tax (CGT) and property investment.
The CGT waiver that has been in place for the last number of years (enabling purchasers of real estate to avail of a 7 year exemption from CGT) is to be phased out by year-end 2014. Property consultants say that this measure served a very useful purpose in helping to kick-start recovery in the property sector when it was needed over the last number of years but is no longer required to stimulate activity. The phasing out of this tax exemption by the end of 2014 will undoubtedly create huge pressures in the industry over the coming weeks to get transactions completed by year-end.
DIRT refund scheme for first time buyers saving for a deposit.
First time buyers will be able to reclaim DIRT deducted on deposits within the 48 month period prior to the date of purchase of their first home, up to a limit on such savings of 20% of the consideration paid for the new home. The relief applies to properties purchased between 14th October 2014 and 31st December 2017. No provision in the Budget speech or accompanying documentation of a similar exit tax exemption for the use of life assurance savings plans for a similar purpose.
DIRT/Exit Tax rates continue to apply at 41%?
Despite the reduction in the top income tax rate from 41% to 40%, there was no mention in the Budget speech or accompanying documentation of a similar reduction in the DIRT/Exit tax rate, which is currently at 41%. Nelson Life Broker-Budget-2015-15-10-2014-69 (2)
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