Budget 2016-Key Points
The changes to USC in this budget were sell signalled. These are actually very beneficial to Public
Sector Pensioners, who pay USC on every Euro of their pension. This contrasts with pensioners from
the private sector on mixed DSP/Occupational pensions who benefit from both exemption and nonaggregation on the DSP portion of the pension.
2015 and 2016 Comparative Position
2015
Income
Up to €12,012
€12,013 to
€17,576
€17,577 to
€70,044
€70,045
2016
Income
1.50%
€12,012
€12,013 to
€18,668
€18,669 to
€70,044
€70,045
3.50%
7%
8%
1%
3%
5.50%
8%
Pensioner under 70-no medical card
This is the position for a single income pensioner on €28,000 with only a Garda Pension.
2015
Pension
€28,000 USC
2016
USC
Saving
180.18
120.12
194.74
166.92
729.54
573.21
1104.46
860.25
244.21
A pensioner in the same circumstances on a pension of €40,000.00 will benefit more due to the
operation of the reduction in the 7% rate
2015
Pension
€40,000 USC
2016
USC
Saving
180.18
120.12
194.74
166.92
1557.08 1223.42
1932
1510.46
421.54
Pensioner over 70 – income of less than €60,000.00
Under 70 but with full medical card
Income
Up to €12,012
€12,013 to
€17,576
Income
1.50%
€12,012
3.50%
Over €12,013
1%
3%
The half percent reduction in the rate is not very useful to this sector!
2015
Pension
€28,000 USC
2016
USC
Saving
180.18
120.12
559.58
479.64
739.76
599.76
140
Inheritance / gift Tax
The change here is the increase in the parent to child threshold from €225,000 to €280,000.00
This is still not great for members owning older established properties in urban areas but will be
helpful in rural areas.
Capital Gains Tax
An interesting change here. ,which was not signalled- is the special rate of CGT for the gain on the
sale of a business.
A revised CGT relief is being introduced for entrepreneurs. Gains on disposals of business assets
made on or after 1 January 2016 will be charged at a reduced rate of 20% up to an overall limit of
€1m. Full details will be included in the Finance Bill.
It is not clear if


Farms are a business within this definition
If this relief is progressive (that is 1st Million at 20% -balance at 33%) or flat rate –(that is if
the gain goes over €1mill the lot is taxed at 33%)
Income Tax
A new earned income relief is being introduced for the self-employed. This cannot be claimed with
the PAYE credit. For anyone already on a pension where the PAYE credit is available there is no
benefit, even if there is self-employment income.
All rates and credits stay the same.
Farm Partnerships
There is a new relief available to registered farm partnerships. Where an established farmer wishes
to pass his or her farm to the next generation of young trained farmers, they can form a succession
farm partnership. This requires that the ownership of 80% of the land is passed to the next
generation within 10 years. A tax credit of up to €5,000 per annum is available to be split between
the partners. This measure is subject to EU State Aid approval.
This is a very valuable relief for anyone in a position to avail of the relief. Conditions will be eagerly
awaited.
LOCAL PROPERTY TAX (LPT)
The next Local Property Tax valuation date has been postponed from 2016 to 2019. The
postponement of the date means that home owners will continue to pay LPT based on the original
valuations that applied for 2013- 2016.
This will be a relief to many members owning longer established properties in urban areas.
Overall no great gains, particularly for older pensioners, who will be disappointed that a more
generous USC cut was not put in place.
Mary Farrell
13th Oct 2015