Budget 2017 was announced on 11 October by the Minister for
Finance, Mr. Michael Noonan TD. We outline some of the notable
1. Reduction in Universal Social Charge ("USC")
The three lowest USC rates were all reduced by 0.5 per cent and
will now apply as follows:
0.5 per cent on income
from €0 to €12,012;
2.5 per cent on income
from €12,013 to €18,772; and
5 per cent on income
from €18,773 to €70,044.
The ceiling for the proposed 2.5 per cent rate will be increased
from €18,668 to €18,772 to ensure that those on the
minimum wage are not subject to the higher rate. It is
expected that these changes will be effective from January
2. Increase in social welfare payments
There will be an increase of €5 on all weekly social
welfare payments. The most relevant of these payments for
employees and employers are:
This proposed increase will have a positive impact on employees
who avail of any of the above benefits and on those employers
that "top up" employees' pay whilst on certain
The State Pension is also set to increase by €5.
These proposed increases are likely to be effective from March
2017, and are subject to the passing of the Social Welfare
3. Special Assignee Relief Programme (SARP) – to continue
SARP is being extended for a further three years until the end
of 2020. The regime has been enhanced in recent years and this
extension is welcome. SARP provides relief from income tax, but not
the USC or Pay Related Social Insurance
("PRSI"), to certain employees who
are assigned by their employer to work in Ireland for the employer
or any associated company.
The employee must have worked for the employer for a minimum of
6 months prior to the assignment. Where certain conditions are
satisfied, an employee may claim to have a portion of his or her
earnings from the employment disregarded for income tax
Since 2015 the portion is 30% of an employee's income
over €75,000. The relief can be claimed for a maximum period
of five consecutive years commencing with the year of first
4. Foreign Earnings Deduction (FED) – extended to
FED is being extended until the end of 2020 and qualifying
countries are being extended to include Columbia and Pakistan. The
minimum number of days for travel is being reduced to 30 per
annum, previously 40.
FED is a relief from income tax, but not USC or
PRSI, for individuals who temporarily carry out duties of
their office or employment in certain foreign countries. The
maximum deduction in any tax year is capped at €35,000 and
therefore the maximum annual tax saving is €14,000
(€35,000 × 40% ie income tax rate).
5. Employee share schemes
Following the recent public consultation on the issue of
share-based remuneration, the Minister today announced his
intention to develop a new, SME-focused, share-based incentive
scheme which would be introduced in Budget 2018, subject to it
having received approval from the European Commission under state
6. PAYE modernisation – launch of Revenue consultation
The Minister in his Budget Statement also announced the launch
of a Revenue consultation process regarding the modernisation
of the Pay As You Earn (PAYE) system.
The consultation process, which will run until 12
December 2016, will relate to the proposed modernisation of the
collection of income tax through the PAYE system. It is
planned that the proposed modernisation will be operational
from 1 January 2019. It intended to allow for significant
streamlining of employer business processes and reduce the
administrative burden by integrating PAYE reporting obligations
into the normal payroll process.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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