While the State pension remains unchanged other welfare payments will be cut by 4%, child benefit is cut by €10 and public service pensions of over €12,000 per annum will also be reduced by an average of 4%.
 
The Minister outlined a new system called the Universal Social Charge to replace the myriad of income and health levies and also cut standard rate bands and credits by 10% to bring them in line with the 2006 rates. There has also been an overall reduction in the effective marginal rate for the self-employed bringing them from 55% to 52%. 
 
One of the most significant changes introduced was the termination of capital allowances and Section 23 relief post 31st December 2014. In particular the restriction of the use of these reliefs from 1st January 2011 against income from the property to which the relief applies will certainly give rise to tax costs for individuals who made substantial financial investments at a time when property prices were inflated and now may not be in a position to utilise the reliefs going forward. 
 
On the business side the Minister confirmed the 12.5% Corporation Tax will remain and confirmed the extension of the start up exemption for new trades commenced in 2011. He confirmed that this relief will now be linked to creating jobs. Also the rebranding of the ‘Business Expansion Scheme’ as the ‘Employment and Investment Incentive’ and raising the limits to €10m is certainly welcomed.
 
Other measures announced include a reduction in the stamp duty rate for residential property together with the abolition of all exemptions and reliefs for stamp duty. Finally there are a number of changes in relation to tax relief for pension contributions and a cap of €200,000 on tax free lump sums on retirement. 
 
Overall the Budget introduces a number of tough measures. 
 
Full details of the relevant amendments to personal and business taxes are set out in the our budget summary which is available in the document below:

RoI Budget Highlights 2011.pdf

If you have any queries in relation to any of the changes announced in the budget please do not hesitate to contact us.