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Budget 2016 Summary from Coleman Financial Planning

Following on from Minister Noonan’s budget announcement earlier today, I have summarised the main points below.

Overall it appears to be a ‘family friendly’ budget with plenty of predictable, pre-election goodies.

There is good news for the self-employed, proprietary directors and parents of young children.

  • Confirmation that the pension levy has been abolished
    • Our pension clients will be delighted to hear that the levy (0.15%) on all pension funds will no longer apply in 2016.  This year’s levy will be based on the value of your pension fund at the 30th of June 2015.
  • Pension tax relief remains unchanged
    • There is still an opportunity before 31st of October (12th of November through ROS) to backdate personal pension contributions to 2014 and obtain tax relief at 41%.
  • New income tax credit for the self-employed & proprietary directors
    • Proprietary directors and their working spouses/civil partners, have traditionally been discriminated against because although they paid their income tax under PAYE like everyone else, they could not claim the PAYE tax credit of €1,650 available to all others paying income tax under PAYE.  From 2016 they will be entitled to a €550 tax credit.  The effect of this is similar to an increase in the standard rate band of €2,750.
  • Reduction in USC rates and increase in bands
    • Some USC rates have been reduced, meaning an increase in net income of up to €900 p.a.
  • Increase in the Inheritance Tax threshold
    • The threshold applying for Parent to Child (Band A) has been increased from €250,000 to €280,000.  While this is a step in the right direction the new threshold is still significantly lower than in 2009 when it was €434,000.
    • The rate of CAT is unchanged at 33%.
  • Reduction in the CGT rate
    • A new rate of 20% will apply on the sale of a business subject to a limit of €1 million.
  • Increase in the State Pension of €3 per week.
    • For the first time since 2009 the Government is applying an increase to the State Pension.  The maximum State Contributory Pension will €12,132 p.a. (€233.30 per week)
  • DIRT, Exit Tax & CGT remain as they were
    • Growth on deposits and investments will still be subject to 41% tax, while the rate of Capital Gains Tax will stay at 33%.
  • Child benefit to increase by €5 to €140 per month from January
  • The maximum rate of motor tax for owners of commercial vehicles will reduce to €900 from €5,195.
  • Free GP care for all children under the age of 12
  • Two weeks State Paternity leave to be introduced by September 2016

So as a company owner and married man, with 2 children under the age of 12, I should be happy about today’s announcements!  It’ll be interesting to see however, what difference the changes make in reality!

If you have any questions in relation to the impact this budget will have on you, your family or your business or you would like advice on pensions, investments or business and family protection, feel free to contact Coleman Financial Planning on (01) 5313711 or visit www.colemanfinancialplanning.ie.

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“I moved my pension and investment management to Coleman Financial Planning shortly after their establishing. This was largely due to a lack of confidence in a previous advisor, but also a suspected loss of interest on their part too. So what a surprise to meet Daragh who offered simple explanations and sound advice, such that I was then able to make informed decisions about my pensions and other policies I had accumulated. Daragh also was able to provide concrete financial planning which has left me with sure footing for the future”

Peter McElwee McElwee Pharmacies 27th January 2017

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