Budget 2018 highlights for employers and employees
Budget 2018 for Businesses
Corporation Tax: the corporation tax rate will remain at 12.5%
BIK: for 2018 there will be a 0% BIK rate on electric vehicles
- there will be no change to the 9% VAT rate in the tourism sector in 2018
- 2019 will see the introduction of a VAT refund scheme for charities. This scheme will compensate charities on VAT incurred in 2018
- there will be an increase in VAT on sunbeds (rising from 13.5% to 23%)
Stamp Duty: there has been an increase in stamp duty on commercial property transactions – from 2% to 6%
Key Employee Engagement Programme (KEEP): a share based employee incentive programme (KEEP) will be introduced January 1st 2018 that will run until December 31st 2023. Remuneration via KEEP share options to employees will be liable to CGT (not income tax, USC and PRSI which are the current liabilities)
National Training Fund Levy: the National Training Fund Levy is set to increase from 0.7% to 0.8% in 2018, 0.9% in 2019 and 1% in 2020
Budget 2018 for Employees
Tax Rates: the 20% standard tax rate and 40% higher tax rate remain unchanged
Standard Rate Cut Off Point (SRCOP): the SRCOP will increase by €750 per year from January 1st 2018
Universal Social Charge (USC): the USC exemption threshold of €13,000 will remain unchanged. The 2.5% rate has dropped to 2%, the 5% rate is down to 4.75% and the 8% rate will not change. Also the surcharge rate of 3% for non-PAYE income over €100,000 will remain unchanged
Earned Income Tax Credit (EITC): EITC will increase from €950 to €1,150. If a person qualifies for EITC and PAYE Tax Credit then the combined total cannot exceed €1,650
National Minimum Wage: the national minimum wage will increase January 1st 2018 from €9.25 to €9.55 for an experienced adult worker. Employees under 18 will be entitled to €6.69 (up from €6.48) per hour while employees over 18 in their first and second years of employment will be entitled to €7.64 (up from €7.40) and €8.60 (up from €8.33) per hour respectively.
Budget 2018 Miscellaneous
Excise Duty: excise duty on alcohol, diesel and petrol will remain unchanged, however, from midnight 10/10/2017, a pack of 20 cigarettes will be 50 cents more expensive (other tobacco products will also increase proportionally)
Motor Tax: motor tax for private vehicles will not change
Sugar tax: April 2018 will see an introduction of tax on sugar sweetened drinks at a rate of 20 to 30 cents per litre depending on the amount of grams of sugar per 100 millilitres contained in the drink
Social Welfare: weekly social welfare payments will increase by €5 from March 26th 2018 (there’ll be a proportionate increase for qualified adult dependents also). The rate for a qualified child will increase from €29.80 to €31.80
Vacant Site Levy: this will increase from the current 3% rate in the first year to 7% in subsequent years
Capital Gain Tax (CGT): the relief period has been reduced from 7 years to 4 years
Mortgage Interest Relief: this scheme has been extended by 3 years to 2020 but with yearly reductions: relief in 2017 and now 2018 will be 75%, 50% in 2019 and 25% in 2020
Home Carer Tax Credit: this will increase by €100 from €1,100 to €1,200
Paycheck Plus Payroll Compliance
Payroll compliance requirements change regularly and it’s imperative that HR, payroll teams, accountant’s etc. keep up with these changes otherwise significant penalties can be incurred. Payroll mistakes, or calculations based on outdated information, can be costly for companies and ensuring payroll compliance can be difficult for businesses and staff that don’t have payroll as a core focus.
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