Home upgrade budget measures being fast-tracked

Changes to the timing of the introduction of tax incentives on home improvement and repair work were included yesterday in the Finance Bill, which seeks to give legislative effect to measures detailed in the budget.

The incentives will be available from tomorrow but property owners will have to have paid their Local Property Tax to be eligible for the scheme.

The credit will be paid out in the two years after the work is carried out, with the first relief payments slated for 2015. To qualify, the work must cost a minimum of €5,000 up to a maximum of €30,000. Home owners will get a tax credit of 13.5 per cent up to a maximum of €4,050.

Planning permission
It will run until the end of 2015, although the relief will be available where expenditure is incurred between January and March of 2016 for works that were granted planning permission before the end of the previous year.

Builders will also have to be tax compliant for a homeowner to qualify for the relief, which will be administered by the Revenue Commissioners online.

Contractors will have to inform Revenue of the works being carried out and the payments they have received from homeowners, who will be entitled to view this information.

Minister for Finance Michael Noonan said bringing forward the commencement date would "act as a timely boost" to the construction sector. It followed lobbying by the industry, which argued that some contracts had been cancelled or postponed as homeowners awaited the original start date for the relief of January 1st.

The Finance Bill gives effect to a number of measures announced by the Minister on budget day.

Under the terms of a new start-your-own-business relief, those who have been unemployed for 15 months and who form an unincorporated business will be free of income tax for the initial two years on the first €40,000 of profits. However, the universal social charge and PRSI will be levied.

Also included are changes to the reliefs afforded on private medical insurance, changes to thresholds around pension funds on retirement, company residency rules, and increases to the Dirt rate of tax on savings.

Incentives to encourage entrepreneurs to invest in assets were also outlined, although they were described by tax practitioners are being restrictive. This scheme is subject to EU state aid approval.

Garda allowance
Among the new measures included in the Bill is an exemption from income tax for the €1,000 annual allowance paid to members of the Garda Reserve. This is intended to cover out-of-pocket expenses.

Calculations for benefit-in-kind for motor vehicles are to be changed to kilometres from miles to reflect the change in road regulations dating back to 2005.

The VAT rate applying to the supply of live horses and greyhounds, and the hire of horses, is being increased from 4.8 per cent to 9 per cent to comply with a European Court of Justice judgment. The rate on “no foal, no fee” insemination services will rise from 4.8 per cent to 13.5 per cent. This is for livestock, horses and greyhounds.

Grants paid to employers participating in the JobsPlus scheme administered by the Department of Social Protection will not be subject to tax.

External service providers to the Revenue will now be subject to the same taxpayer confidentiality rules as apply to Revenue officers. An effect of this will be to make it an offence for a service provider to seek information from a taxpayer that is not required for the purposes of the tax Acts.

End-of-year deadline
The Finance Bill is being published early this year to comply with timelines being introduced for all euro area member states and the Government wants it to have completed its passage through the Oireachtas by December 31st.