Tax breaks being abolished from January (unless otherwise stated):
- Rent relief to be phased out over eight years, the same timeline as previously announced for mortgage interest relief.
- Patent royalty exemption, effective from the launch of the National Recovery Plan on November 24th.
- Tax relief on loans to acquire an interest in certain companies.
- Abolition of tax relief for trade union subscriptions.
- Termination of scheme of accelerated capital allowances for farmers who incur capital expenditure on farm buildings and structures for use in the control of pollution.
- Tax exemption from BIK for employer provided childcare.
- Abolition of tax relief on subscriptions to professional bodies.
- Capital expenditure on new machinery and plant for use in mining.
- Approved share options scheme, effective from the launch of the National Recovery Plan on November 24th.
- Tax relief for new shares purchased by employees.
- Exemption from tax in respect of grants or payments to the National Co-Operative Farm Relief Services Limited.
Property-based “legacy” reliefs being abolished on phased basis.
Section 23
- From January 1st, 2011, this will be restricted to income from the section 23 property itself (currently such income can be set against all rental income).
- At end of 10-year holding period, any unused relief will be lost. If the property is sold within this period, the new owner will not get section 23 relief and the seller continues to be subject to a clawback of relief already given.
- For section 23 properties yet to be sold, for which the relief has yet to be claimed, the 10-year qualifying period will start on June 30th, 2011, regardless of the date of the first qualifying lease. Therefore, in such cases no section 23 relief will be available after June 30th.
- Residential owner-occupier relief is unaffected by these changes.
Capital allowances (these restrictions apply solely to passive participants):
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- With effect from Budget day, any unused capital allowances carried forward beyond the seven-year period within which the allowances are made will be lost as follows: seven-year period – seven-year schemes; 10-year period – 10 year schemes.
- From 2011 on, capital allowances will be restricted to offset against income from the property which gave rise to them, whether rental or trading income, with no setting sideways against any other form of income.
- Schemes with a period over 10 years which have not ended will be truncated to seven years from when allowances are first made.
- Capital allowances limited by truncation will be reduced by 20 per cent and may be made evenly in the year of assessment 2011 and all subsequent years of assessment up to and including the seventh year after the allowance was first made.
Guillotine from 2014:
- Termination of all unclaimed and unused capital allowances, arising after or carried forward from 2014 as well as unused section 23 relief carried forward from 2014.
Income tax reliefs being restricted:
- Health and income levy (Universal Social Charge) to be charged on approved profit sharing schemes.
- Health and income levy (USC) to be charged on approved save-as-you-earn schemes.
- Health and income levy (USC) to be charged on unapproved share options.
- Health and income levy (USC) to be charged on on share awards.
- Restriction of the tax-free element of ex-gratia termination payments to €200,000 so that payments above this amount will be subject to tax at the marginal rate. This change will apply with effect from January 1st.
- Ceiling of €40,000 on the tax-exempt earnings of artists.
- PRSI to be charged on approved profit sharing schemes.
- PRSI to be charged on approved save-as-you-earn schemes.
- PRSI to be charged on unapproved share options.
- PRSI to be charged on share awards.