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Budget 2009

Introduction

The main Budget changes which may affect people living in Ireland are set out below.

This document sets out changes in the areas of social welfare, tax, health, transport, environment, housing, education, employment and other areas.

For a full list of the Budget changes, please read the Department of Finance’s Summary of Budget Measures.

Social Welfare

General changes to personal payments

The following payments increase by €6.50 per week:

  • Jobseeker’s Benefit
  • Jobseeker’s Allowance
  • Supplementary Welfare Allowance
  • One-Parent Family Payment
  • Prisoner’s Wife’s Allowance
  • Pre-Retirement Allowance
  • Farm Assist
  • Health and Safety Benefit
  • Widow’s and Widower’s (Contributory) Pension (under 66)
  • Widow’s and Widower’s (Non-Contributory) Pension
  • Guardian’s Payment (Contributory)
  • Guardian’s Payment (Non-Contributory)
  • Deserted Wife’s Allowance
  • Deserted Wife’s Benefit (under 66)

This increase applies to the full-rate payment. There are proportional increases for people getting reduced payments (January 2009).

Qualified adult increases

Qualified adult rate (under 66) for State Pension (Contributory), State Pension (Transition) increases by up to €4.70 per week (January 2009).

Qualified adult rate (over 66) for State Pension (Contributory), State Pension (Transition) and Invalidity Pension increases by up to €6.30 per week (January 2009).

Qualified adult rate (under 66) for State Pension (Non-Contributory) increases by €4.60 (January 2009).

Qualified adult rate for Invalidity Pension (under 66) increases by €4.60 per week.

Qualified adult rate for the following payments increases by €4.30 per week:

  • Jobseeker’s Benefit
  • Jobseeker’s Allowance
  • Supplementary Welfare Allowance
  • Pre-Retirement Allowance
  • Farm Assist
  • Health and Safety Benefit
  • Illness Benefit
  • Disability Allowance
  • Blind Pension
  • Injury Benefit
  • Incapacity Supplement

This increase applies to the full-rate payment. There are proportional increases for people getting reduced payments.

Upper ceiling for entitlement to a tapered qualified adult payment for Jobseeker’s Benefit and Health and Safety Benefit increases by €10 to €310 per week (January2009).

Older people

The maximum rates of the following pensions increase by €7 per week:

  • State Pension (Contributory)
  • State Pension (Transition)
  • State Pension (Non-Contributory)
  • Invalidity Pension (for people who are 65)
  • Widow’s/Widower’s (Contributory) Pension (over 66)
  • Death Benefit Pension (over 66)
  • Deserted Wife’s Benefit (over 66)

There are proportional increases for people getting reduced payments (January 2009).

People with disabilities

The following disability payments increase by €6.50 per week:

  • Disablement Pension
  • Illness Benefit
  • Disability Allowance
  • Blind Pension
  • Injury Benefit
  • Incapacity Supplement
  • Invalidity Pension (for people under 65)

This increase applies to the full-rate payment. There are proportional increases for people getting reduced payments (January 2009).

Duration of the Illness Benefit scheme is limited to 2 years for new claimants who have 260 or more paid PRSI contributions (January 2009).

Earnings limit for graduated rates of Illness Benefit increase from €150 to €300 per week in the relevant tax year for new claimants (January 2009).

Carers

Carer’s Allowance increases by €6.50 (under 66) and €7 (66 and over) per week.

Half-rate Carer's Allowance increases by €3.25 (under 66) and €3.50 (66 and over) per week.

This increase applies to the full-rate payment. There are proportional increases for people getting reduced payments.

Carer’s Benefit and Constant Attendance Allowance increase by €6.50 per week (January 2009)

Families and children

There is no increase to Child Benefit. The rate payable to a child aged 18 is reduced to half the usual rate (January 2009). From 2010, Child Benefit will not be paid to a child aged 18.

For certain low income families affected by the change in the Child Benefit for children aged 18, there will be a special separate compensatory payment of €15 per week for children aged 18 years. This compensatory measure will end on 31 December 2010.

Early Childcare Supplement will be paid monthly instead of quarterly. The period for which children qualify will be reduced from 0-6 years to 0-5 years and 6 months.

Increase for a Qualified Child is raised to €26 (€2 increase) per week (January 2009).

All Family Income Supplement (FIS) income thresholds increase by €10 per week per child (January 2009).

Increase in the additional income disregard by €50 per week from €100 to €150 for Back School Clothing and Footwear Allowance (June 2009). Further compensatory measures will be applied to the Back to School Clothing and Footwear Allowance scheme for children aged 18 years. These arrangements will apply until January 2011.

Maternity and Adoptive Benefit

Increase of €8.50 per week in the minimum rate of Maternity and Adoptive Benefit to €230.30 per week (January 2009).

National Fuel Scheme

The rate of the National Fuel Scheme will increase by €2 to €20 per week (January 2009).

The duration of payment of the National Fuel Scheme will increase by 2 weeks to 32 weeks (April 2009).

Jobseeker’s Benefit

Jobseeker’s Benefit is reduced from 15 to 12 months for new claimants and people getting Jobseeker’s Benefit for less than 6 months on 14 October 2008 who also have at least 260 paid contributions.

Jobseeker’s Benefit is reduced from 12 to 9 months for new claimants and people getting Jobseeker’s Benefit for less than 3 months on 14 October 2008 who also have at less than 260 paid contributions.

Number of PRSI contributions required to claim Jobseeker’s Benefit is being increase from 52 to 104 (January 2009).

New claimants must have a minimum number of 13 paid PRSI contributions in the Relevant Tax Year for Jobseeker’s Benefit (January 2009).

Earnings limit for graduated rates of payment to increase from €150 to €300 per week in the relevant tax year for new claimants (January 2009).

Health and Safety Benefit

Earnings limit for graduated rates of payment to increase from €150 to €300 per week in the relevant tax year for new claimants of Health and Safety Benefit (January 2009).

New claimants must have a minimum number of 13 paid PRSI contributions in the Relevant Tax Year (January 2009).

Number of PRSI contributions required for Health and Safety Benefit is being increase from 52 to 104 (January 2009).

PRSI Contributions

Earnings ceiling for PRSI will increase by €1,300 from €50,700 to €52,000 (January 2009).

Number of PRSI contributions required to claim Jobseeker’s Benefit, Illness Benefit, and Health and Safety Benefit is being increase from 52 to 104 (January 2009).

Rent Supplement and Mortgage Interest Supplement

Increase in the minimum contribution towards rent by €5 per week to €18 per week for Rent Supplement and Mortgage Interest Supplement (January 2009).

Social Insurance Payments
Present € New €
State Pension (Contributory)
under age 80 223.30 230.30
aged 80 and over 233.30 240.30
State Pension (Transition)
age 65 223.30 230.30
Widow's/Widower's (Contributory) Pension/Deserted Wife's Benefit
under age 66 203.30 209.80
aged 66 and under age 80 223.30 230.30
aged 80 and over 233.30 240.30
Invalidity Pension
under age 65 203.30 209.80
aged 65 223.30 230.30
Carer's Benefit/Constant Attendance Allowance 214.70 221.20
Disablement Pension 228.90 235.40
Jobseeker's/Illness/Health & Safety/Injury Benefit 197.80 204.30
Maternity/Adoptive Benefit – Minimum rate 221.80 230.30
Guardian’s Payment (Contributory) 170.00 176.50

Social Assistance Payments
Present € New €
State Pension (Non-Contributory)
aged 66 and under age 80 212.00 219.00
aged 80 and over 222.00 229.00
Carer's Allowance
under age 66 214.00 220.50
aged 66 and over 232.00 239.00
Blind Pension 197.80 204.30
Widow's/Widowers's (Non-Contributory) Pension/ Deserted Wife's/ Prisoner Wife's Allowance 197.80 204.30
One-Parent Family Payment 197.80 204.30
Pre-Retirement/Disability Allowance 197.80 204.30
Supplementary Welfare Allowance 197.80 204.30
Jobseeker's Allowance 197.80 204.30
Farm Assist 197.80 204.30
Guardian’s Payment (Non-Contributory) 170.00 176.50

Qualified Adult Allowances: Social Insurance Payments
Present € New €
State Pension (Contributory)/(Transition)
under age 66 148.80 153.50
aged 66 and over 200.00 206.30
Invalidity Pension
under age 66 145.10 149.70
aged 66 and over 200.00 206.30
Jobseeker's/Illness/Health & Safety/Injury Benefit 131.30 135.60

Qualified Adult Allowances: Social Assistance Payments
Present € New €
State Pension (Non-Contributory) 140.10 144.70
Blind Pension 131.30 135.60
Pre-Retirement/Disability Allowance 131.30 135.60
Supplementary Welfare Allowance 131.30 135.60
Jobseeker's Allowance 131.30 135.60
Farm Assist 131.30 135.60

Child Benefit (monthly)
Number of children Present € New €
1 child 166 No Change
2 children 332 No Change
3 children 535 No Change
4 children 738 No Change
5 children 941 No Change
6 children 1,144 No Change
7 children 1,347 No Change
8 chidlren 1,550 No Change

Family Income Supplement (weekly)
Number of children Present € New €
1 child 490 500
2 children 570 590
3 children 655 685
4 children 760 800
5 children 870 920
6 children 970 1,030
7 children 1,090 1,160
8 children 1,170 1,250

Citizens Information Board and Money Advice and Budgeting Service

The Money Advice and Budgeting Service (MABS) is to be assigned to the Citizens Information Board.

Income and other taxes

The standard rate tax band increases by €1,000 for a single person and €2,000 for a married couple

Standard Rate Bands

2008 € 2009 €
Single 35,400 36,400
Married, one income 44,400 45,400
Married, two incomes 70,800 72,800*
One parent/widowed parent 39,400 40,400

*The tax band of €72,800 available to married couples with two incomes in 2009 is transferable between spouses up to a maximum of €45,400.

Income levy

A new income levy is being introduced. The rate of the levy is 1% on income up to €100,100 pa; 2% on income between €100,101 and €250,120 pa; 3% on income in excess of €250,120 pa. The levy is effective from 1 January 2009.

The levy is paid on gross income, before deductions for capital allowances or contributions to pensions.

You will pay the income levy unless:

  • Your income is less than €18,304 a year
  • You are aged over 65 and your annual income is less than €20,000 for a single individual or €40,000 for a married couple
  • You have a medical card

Certain income is exempt from the income levy:

  • all social welfare payments, including social welfare payments received from abroad
  • payments that are made in lieu of social welfare payments such as Community Employment Schemes or Back to Education Allowance
  • income subjected to DIRT

PRSI

The ceiling above which you do not have to pay PRSI is increased from €50,700 to €52,000.

PRSI
Current Proposed
PRSI ceiling €50,700 €52,000

Tax Credits

A summary of tax credits for 2009.

Tax Credits
Tax Credit 2008 € 2009 €
Single person 1,830 no change
Married person 3,660 no change
PAYE credit 1,830 no change
Widowed person (without dependent children) 2,430 no change
One parent family credit 1,830 no change
Incapacitated child credit max 3,660 no change

Blind Tax Credit

Single person

One spouse blind

Both spouses blind

1,830

1,830

3,660

no change

Widowed parent

Year 1

Year 2

Year 3

Year 4

Year 5

4,000

3,500

3,000

2,500

2,000

no change

Age tax credit

Single / widowed

Married

325

650

no change
Dependent relative 80 no change
Home carer 900 no change

Other income tax provisions

Mortgage interest relief

The rate of mortgage interest relief for first-time buyers is being increased from 20% to 25% in year 1 and year 2 and to 22.5% in years 3, 4 and 5. The additional relief will be available to new first-time buyers and first-time buyers who have bought a house in the last 4 years. These changes take effect from 1 January 2009.

The rate of mortgage interest relief for non-first-time buyers is being reduced from 20% to 15% from 1 January 2009.

Tax relief on unreimbursed medical expenses

Tax relief on medical expenses will be granted at the standard rate only (20%) from 1 January 2009, with the exception of nursing home expenses which will be standard-rated from 1 January 2010.

Levy on car parking facilities provided to employees by their employers

A flat rate levy of €200 per year will be charged on employees whose employer provides them with car parking facilities. The levy only applies to employer-provided car parking facilities situated in the main urban centres.

Cycle to work scheme

From 1 January 2009, the provision of bicycles and associated safety equipment by employers to employees who agree to use the bicycles to cycle to work will be treated as a tax exempt benefit-in-kind. The exemption may only apply once in any 5 year period in respect of any employee. There will be a limit on the value of such purchases of €1,000 for each employee. The scheme may also be implemented through salary sacrifice arrangements, whereby an employee agrees to forgo part of their salary to cover the costs associated with the purchase of the bicycle and associated safety equipment. Where such salary sacrifice arrangements are implemented, they must be completed over a maximum period of 12 months.

Increase in the specified rates for preferential home loans and other loans

An employee in receipt of a preferential loan is charged income tax on the difference between the interest actually paid and the amount which would have been payable at the “specified” rates of interest for the loans. To reflect changes in interest rates, the specified rate in respect of loans (other than home loans which remain at 5.5%) is being increased from 13% to 15% from 1 January 2009.

Tax relief for the donations of heritage items

The tax relief in respect of the donation of heritage items to approved State institutions is being limited to 80% of the market value of the heritage item donated.

The tax relief in respect of the donation of heritage property to the Irish Heritage Trust is being limited to 80% of the market value of the heritage property donated.

The ceiling on the aggregate value of donations qualifying for each of these schemes in any one year will remain at €6 million.

Change to Benefit-in-Kind (BIK) charge for company cars

The Finance Bill will contain provisions to change the basis of the BIK charge on company cars to relate it to the CO2 emissions level of the car.

VAT

The standard rate of VAT will increase from 21 to 21.5% with effect from 1 December 2008. This increase will apply to all goods and services which are currently subject to VAT at 21 %. There is no change in the zero rate which applies to food, children’s clothes and footwear, oral medicines and several other products. The 13½% rate which applies to new houses, labour-intensive services, gas, electricity and home heating fuel also remains unchanged.

Excise duties

Increase in tax on petrol

The mineral oil tax on petrol will be increased by 8 cent per litre (including VAT) with effect from midnight on 14 October 2008.

Tobacco excise

The Excise Duty on a packet of 20 cigarettes is being increased by 50 cent (including VAT) with a pro-rata increase on other tobacco products, with effect from midnight on 14 October 2008.

Alcohol excise

Excise duty on a standard bottle of wine is being increased by 50 cent (including VAT) with effect from midnight on 14 October 2008. Pro-rata increases are also being applied to other wine, and certain other fermented and intermediate products.

A reduced rate of excise duty, at 50% of the full appropriate excise duty rate for beer and cider, will be introduced for low alcohol beer and cider (beer and cider products with an alcohol by volume content of 2.8% or less), with effect from midnight on 14 October 2008.

Excise licences

A range of alcohol-related licensing fees, including off-licences, but excluding pub licences, are being increased to €500 in each case. These increases will apply from the appropriate annual renewal dates in 2009.

Betting duty

The betting duty rate will be increased from 1% to 2% with effect from 1 January 2009.

Air travel tax

An air travel tax applying to all departures from Irish airports will come into force on Monday 30 March 2009. The general rate will be €10 per passenger with a lower rate of €2 for shorter air journeys (under 300 km).

An indicative schedule listing the destinations from particular Irish airports to which the lower rate will apply is set out below. Other destinations from Irish airports in excess of 300 km will attract the €10 rate.

The Finance Bill will provide that the tax will be payable by the appropriate airport authority to the Revenue Commissioners for passengers departing from Irish airports on and from 30 March 2009. In effect the airport authority will collect the tax from the airlines.

The air travel tax will not apply to:

  • passengers under 2 years
  • disabled passengers and people assisting them
  • aircraft with less than 20 passenger seats
  • transit passengers
  • members of the crew
  • air services to and from Irish offshore islands
  • aircraft departing airports that in the previous calendar year had less than 10,000
    departing passengers.

Destinations to which the lower air travel tax of €2 will apply*

From To
Dublin Blackpool; Cardiff; Cork; Donegal; Derry; Galway; Glasgow; Glasgow (Prestwick); Isle of Man; Knock; Kerry; Liverpool; Manchester; Shannon; Sligo
Cork Dublin; Newquay
Kerry Dublin
Shannon Dublin
Sligo Dublin
Donegal Dublin; Glasgow
Waterford Galway
Galway Dublin; Waterford
Knock Dublin


*This list is for illustrative purposes and only includes scheduled air services. Chartered flights will be subject to the air travel tax with the lower rate also applying to destinations no further than 300 km from the departure point.

Taxation of farmers

Farmer’s flat rate addition

The farmer’s flat rate addition is being maintained at 5.2% for 2009. The flat rate is designed to reimburse non-VAT registered farmers for the VAT they incur on their inputs.

Extension of stamp duty relief for young trained farmers

Stamp duty relief is available for farmers acquiring land, who are aged under 35 and have specific agricultural training. The relief is due to terminate on 31 December 2008. This relief is now being extended for 4 years and the relief will apply in respect of instruments executed no later than 31 December 2012.

Extension of stamp duty relief for farm consolidation

Stamp duty relief is available to a farmer consolidating his/her holding. The relief is due to terminate on 30 June 2009 and this termination date will be extended to 30 June 2011.

Farmers stock relief

Provision is being made to renew the 25% general farming stock relief and the special 100% stock relief for Young Trained Farmers for a further 2 years to 31 December 2010.

Farm pollution control relief

Provision is being made to extend the 31 December 2008 deadline of the scheme of capital allowances for expenditure on certain pollution control measures relief to 31 December 2010.

Stamp duty

ATM and debit cards

Changes are being made to the stamp duties that apply to ATM and debit cards.

Description Current New
ATM cards €5 €2.50
Debit cards €5 €2.50
Combined ATM/Debit cards €10 €5

The changes for ATM and Debit cards will take effect for the year ending 31 December 2008, the duty for which is normally collected from bank customers by financial institutions in early 2009.

Bills of exchange (including cheques)

The stamp duty rate on Bills of Exchange is being increased from 30 cent to 50 cent for Bills of Exchange drawn on, or after, 15 October 2008. In the case of cheques, the increase will apply to cheques supplied by financial institutions to customers on, or after, 15 October 2008.

Capital Gains Tax

Change in rate of Capital Gains Tax

The rate of Capital Gains Tax (CGT) is being increased to 22% from 20% for disposals made from midnight on 14 October 2008.

Change in payment dates

The payment date for disposals in the period January to November is being changed to mid-December and the tax on disposals in December will now be due on the following 31 October (the existing pay and file date).

Tax on savings

Deposit Interest Retention Tax (DIRT) and taxes on life assurance policies and investment funds

The rates of retention tax that apply to deposit interest and the rates of tax that apply to (a) life assurance policies and (b) investment funds, are being increased by 3 percentage points to 23% and 26% respectively. The increased rates will apply to payments, including deemed payments, made on or after 1 January 2009. Full details in relation to Deposit Interest Retention Tax will be included in the Finance Bill.

Pensions

Contribution limit

The annual earnings limit for determining maximum tax-relievable contributions for pension purposes is being set at €150,000 for 2009 as compared with the 2008 limit of €275,239.

Indexation of maximum allowable pension funds

The adjustment, in line with an earnings index, of the maximum allowable thresholds for pension funds on retirement (the standard and personal fund thresholds) will not be made for 2009.

Motor taxation

New motor tax rates and fees for trade licence plates

The Budget provides for increases in motor tax rates and fees for trade licence plates.

The proposed increases are 4% for cars below 2.5 litres capacity and in CO2 emissions bands A to D, and 5% for cars above the 2.5 litre threshold and in CO2 emissions bands E, F and G.

Goods vehicles and all other vehicles will also increase by 4%.

There is no increase for electric vehicles.

Trade plate licences will also increase by 4%.

The new rates will apply to motor tax discs and trade plate licences taken out for periods beginning on or after 1 January 2009.

Charge on non-principal private residences

A charge will be introduced on all non-principal private residences. The charge will be levied and collected by local authorities, and will be used to support the provision of local services.

The new charge will be set at €200 per dwelling, and will come into effect in 2009. It will be payable by the owners of private rented accommodation, holiday homes and other non-principal residences but will not be applied to new dwellings as yet unsold. Legislation will be needed to give effect to these arrangements.

Further information on tax changes in Budget 2009 can be found on the Revenue website or through the Revenue freephone line 1800 314 414 (open 9:30am to 5:30pm, Wednesday 15 and Thursday 16 October).

Health and transport

Health

Funding

There will be a 2.1% increase in health spending in 2009. Gross expenditure for the Health and Children Group, which includes the Department of Health and Children, the Health Service Executive (HSE) and the Office of the Minister for Children and Youth Affairs is €16,335 million in 2009, an increase of €180.7 million. The underlying gross increase is €384.7 million when account is taken of the Long-term Care Repayment Scheme.

Medical cards for over 70s

New applications

From 1 January 2009 new income thresholds will apply for medical cards for people aged 70 and over. (The existing arrangements continue to apply until the end of 2008.)

New income thresholds will be €700 weekly gross for a single person (36,500 per year) and €1,400 a week (€73,000 a year) for a couple. It appears at present that there will be no deductions allowed as were outlined in previous announcements, for example, rent or mortgage or medical expenses.

If one member of a couple is aged 70, they will both qualify for a medical card if their income is below €1,400 a week.

Income from savings will be taken into account, but savings up to the first €36,000 (for a single person) and €72,000 (for a couple) are not counted.

People over age 70 who already have a medical card

The card will not expire on 31st December 2008, as stated in previous announcements.

The HSE will write to all people aged 70 and over informing them about the new arrangements. Only people who have income above the limits will be asked to reply to the HSE. Everyone else will simply keep their card.

People over these limits can still apply for medical cards on a hardship basis under the discretionary scheme.

Fair Deal nursing home scheme

€55 million is being provided to implement the Fair Deal scheme to provide a more equitable system of residential care for older people.

Disability

€10 million is being provided to fund 125 additional therapy posts in the disability and mental health services, targeted at children of schoolgoing age.

Domiciliary Care Allowance

Eligibility for the Domiciliary Care Allowance is being extended from 16 to 18 year-olds and the minimum age threshold for entitlement to Disability Allowance will be 18 years (for new claimants).

Illness Benefit

Entitlement to Illness Benefit for new claimants will be limited to 2 years.

HSE payments

Blind welfare allowance
Present
New
Blind Pensioner 61.60 63.60
Blind Married Couple 123.10 127.20

The Blind Welfare Allowance rate for a couple is only applicable where both applicant and their partner/spouse are qualified.

Infectious Diseases Maintenance Allowance
Present
New
Personal Rate 197.80 204.30
Person with qualified adult 329.10 339.90
Personal Rate with qualified adult and qualified child 353.10 365.90

All payments effective from January 2009.

Hospital and long stay charges

Charges for private and semi-private beds in public hospitals will increase by 20%.

The Accident and Emergency (A& E) charge is being increased from €66 to €100 for non-medical card holders who attend A& E departments without a letter from their GP, while the public hospital statutory in-patient charge is being increased from €66 to €75 per day.

Long stay charges will increase by €33.25 a week for Class 1 and by €24.95 a week for Class 2.

Drugs Payment Scheme

The Drug Payment Scheme threshold is being increased from €90 to €100 per month which will lead to savings of €15 million in drug costs.

Early Childcare Supplement

The Early Childcare Supplement will be paid monthly instead of quarterly and eligibility is being changed to reduce the period for which children qualify for the payment from 0-6 years to 0-5 years and 6 months.

Tax relief on unreimbursed medical expenses

Tax relief for unreimbursed medical expenses, which are currently available at the full marginal rate of tax, will be reimbursed at the standard rate only (20%) from1 January 2009 with the exception of nursing home expenses which will be standard rated from 1 January 2010.

Other health allocations

The Cancer Control Programme is allocated €15 million.

€33 million is being allocated to meet the full year cost of service developments commenced in 2008.

The HSE will begin a new proposal to fast track the rollout of new GP practice units in collaboration with the private sector. The HSE will retain full control of the units.

A range of administrative (€115 million) and other operational efficiencies (€270 million) will be made in the HSE and agencies, to release resources for allocation to key frontline health and personal social services in 2009. The Cancer Control Programme is allocated €15 million and €33 million is being allocated to meet the full year cost of service developments commenced in 2008.

Programme of redundancies in the HSE

A targeted voluntary early retirement scheme will be introduced for the HSE. This will initially be targeted at surplus middle management and administrative staff, but may be extended to other surplus staff. Discussions are underway on the development of such a scheme.

Transport

Motor tax

The Budget provides for increases in motor tax rates and fees for trade licence plates.

The proposed increases are 4% for cars below 2.5 litres capacity and in CO2 emissions bands A to D, and 5% for cars above the 2.5 litre threshold and in CO2 emissions bands E, F and G.

Goods vehicles and all other vehicles will also increase by 4%.

There is no increase for electric vehicles.

Trade plate licences will also increase by 4%.

The new rates will apply to motor tax discs and trade plate licences taken out for periods beginning on or after 1 January 2009.

Motor tax rates for private cars based on engine capacity (cc)
Engine capacity (cc) Present annual tax rate € New annual tax rate €* % increase
not over 1,000 165 172 4
1,001 to 1,100 249 259 4
1,101 to 1,200 275 286 4
1,201 to 1,300 298 310 4
1,301 to 1,400 320 333 4
1,401 to 1,500 343 357 4
1,501 to 1,600 428 445 4
1,601 to 1,700 453 471 4
1,701 to 1,800 530 551 4
1,801 to 1,900 560 582 4
1,901 to 2,000 590 614 4
2,001 to 2,100 754 784 4
2,101 to 2,200 791 823 4
2,201 to 2,300 827 860 4
2,301 to 2,400 861 895 4
2,401 to 2,500 899 935 4
2,501 to 2,600 1,067 1,120 5
2,601 to 2,700 1,109 1,164 5
2,701 to 2,800 1,147 1,204 5
2,801 to 2,900 1,189 1,248 5
2,901 to 3,000 1,231 1,293 5
3,001 or more 1,491 1,566 5
Electrical 146 146 0

*effective from 1 January 2009

Motor tax rates for private cars based on CO2 emissions
CO2 emissions - grams per km Present annual tax rate € New annual tax rate €* % increase
Band A - 0 - 120g 100 104 4
Band B - 121g to 140g 150 156 4
Band C - 141g to 155g 290 302 4
Band D - 156g to 170g 430 447 4
Band E - 171g to 190g 600 630 5
Band F - 191g to 225g 1,000 1,050 5
Band G - more that 225g 2,000 2,100 5

*effective from 1 January 2009

Other changes affecting motoring

The Finance Bill will contain provisions to change the basis of the Benefit-in-Kind (BIK) charge on company cars to relate the charge to the level of CO2 emissions.

The excise duty on petrol will rise by 8 cents a litre from midnight on 14 October 2008.

There will be a new flat-rate levy of €200 per year on employees whose employer provides them with car parking facilities in major urban areas.

Air travel tax

An air travel tax applying to all departures from Irish airports will come into force on Monday 30 March 2009. The general rate will be €10 per passenger. A lower rate of €2 will apply for air journeys under 300 km.

An indicative schedule listing the destinations from particular Irish airports to which the lower rate will apply is set out below. Other destinations from Irish airports in excess of 300km will attract the €10 rate.

The Finance Bill will provide that the tax will be payable by the appropriate airport authority to the Revenue Commissioners for passengers departing from Irish airports on and from 30 March 2009. In effect the airport authority will collect the tax from the airlines.

The air travel tax will not apply to:

  • passengers under two years
  • passengers with disabilities and people assisting them
  • aircraft with less than 20 passenger seats
  • transit passengers
  • crew members
  • air services to and from Irish offshore islands
  • aircraft departing airports that had fewer than 10,000 departing passengers in the previous calendar year.

Examples of destinations to which the lower air travel tax of €2 will apply*
From To
Dublin Blackpool; Cardiff; Cork; Donegal; Derry; Galway; Glasgow; Glasgow (Prestwick); Isle of Man; Knock; Kerry; Liverpool; Manchester; Shannon; Sligo
Cork Dublin; Newquay
Kerry Dublin
Shannon Dublin
Sligo Dublin
Donegal Dublin; Glasgow
Waterford Galway
Galway Dublin; Waterford
Knock Dublin

*This list is for illustrative purposes and only includes scheduled air services.

Chartered flights will be subject to the air travel tax, with the lower rate also applying to destinations no further than 300 km from the departure point.

Environment and Housing

Environment

The Water Services Investment Programme gets an increased provision of €89 million (+19%).

Due to a reduction of 63% in funding, the landfill remediation programme in 2009 will require local authorities to re-profile necessary works over a longer period with the most urgent works being prioritised.

Funding for urban regeneration in 2009 has decreased by 95%. This reflects the completion in early 2008 of the final funding allocations for urban renewal grants under the two Regional Operation Programmes (2000-2006). The introduction of a new programme in 2010 will be examined in 2009 subject to the availability of resources.

Capital funding of €71 million is being made available to fund sustainable energy and energy research programmes. This allows for the expansion of some programmes.

Funding for the Home Energy Saving scheme run by Sustainable Energy Ireland (SEI), and piloted since 2008, is being increased from €5 million in 2008 to €20 million in 2009.

Funding of €5 million will also be provided for the Warmer Homes Scheme.

The funding provision for the Greener Homes Scheme run by SEI has been scaled back from €27 million to €12 million.

Capital expenditure of €10 million is provided for additional carbon reduction measures to target climate change initiatives in the transport sector.

The tax incentive introduced in Budget and Finance Act 2008, which provides for capital allowances of 100% of expenditure incurred by companies in the year the equipment is purchased, is being extended from 3 categories to 7 categories. The new categories to be included in this scheme are:

  • Data server related systems and large energy saving office equipment associated with Information & Communications Technology
  • Efficient heating/electricity provision equipment and control systems
  • Efficient electrical and control equipment associated with process & heating ventilation and air-conditioning systems
  • Alternative fuel vehicles

The salmon conservation scheme is winding down in 2009, giving a reduction of €11.3 million on current spending, compared with 2008. There is also a reduction of €0.4 million on the Fisheries Boards funding.

Capital funding of €45 million is being provided for communications infrastructure. This will facilitate rollout of the National Broadband Scheme to ensure broadband availability within the timeframe 2009 to 2011 in rural areas not currently served by broadband.

Housing

Mortgage interest relief

From 1 January 2009, mortgage interest relief is being increased for first-time buyers from 20% to 25% in year 1 and year 2 and to 22.5% in years 3, 4 and 5. The additional relief will be available to new first-time buyers and first-time buyers who have bought a house in the last 4 years.

Local authority charge on second homes.

Legislation will be introduced to provide for a charge of €200 on all non-principal private residences by the local authority.

Local authority mortgage

A new Home Choice Loan will be available from early November to first time buyers of new properties subject to a maximum value of 92% up to €285,000. The scheme will be operated on a regional basis by a small number of local authorities, with support from the Affordable Homes Partnership. Funding will be provided by the Housing Finance Agency.

Prospective applicants can register their interest on www.homechoiceloan.ie or Lo Call 1890 252 842.

Affordable housing

Introduction of a Government Equity Initiative to assist those seeking affordable housing. Under this Initiative the Government will assist those seeking affordable housing by taking an equity share. It will replace the current approach through which affordable housing is made available under Part V, the 1999 Affordable Housing Scheme and the Affordable Housing Initiative.

Instead of selling units at a discounted price with the value of the discount to be subject to a reducing claw-back, the Government would take an equity stake in affordable units sold, which the purchaser can either buy out in steps or at the end of a fixed period.

Energy saving grants and schemes

Funding for the Home Energy Saving scheme run by Sustainable Energy Ireland (SEI) is being increased from €5 million in 2008 to €20 million in 2009.

Funding of €5 million will also be provided for the Warmer Homes Scheme.

The funding provision for the Greener Homes Scheme run by SEI has been scaled back from €27 million to €12 million.

Housing investment

Total exchequer provision for housing will be almost €1.66 billion. It will allow a range of social and affordable housing programmes.

Additional funding for housing

  • Additional funding of €10 million is provided in 2009 for the voluntary and co-operative housing sector under the Capital Loans and Subsidies Scheme
  • €3 million is provided for the provision of homeless accommodation
  • €39.5 million has been provided under the Rental Accommodation Scheme to meet carryover and new commitments in 2009 (reflecting the transfer from the Department of Social and Family Affairs of a further group of households previously in receipt of Supplementary Welfare Allowance)

Education and employment, other areas

Education

Education funding

There is an increase of €308 million in the total expenditure provision for education in 2009. This includes an increase of €229 million in current spending to provide for the additional costs across the system as a result of increasing student numbers due to demographic factors. There is an increase of €79 million in capital expenditure.

€581 million is provided to continue the investment being made in the school building programme.

€265 million, an increase of 44%, is provided for infrastructural investment for higher education, including additional capital funding for strategic research as part of the Strategy for Science Technology & Innovation.

Increase in capitation funding for schools

Capitation funding for primary and post-primary schools is to be increased by €20 million. This will provide for an increase of €21.42 in the standard capitation for primary schools bringing the rate to €200 per pupil and the ancillary grant will be increased from €151.50 per pupil to €155 per pupil. For post-primary schools there is an increase of €14 per pupil in the capitation grant bringing the rate to €345 per pupil.

Special educational needs

An additional €10 million is being provided to fund a package of measures in the area of special education, as an interim measure to continue to enhance the service provided in this area pending the full implementation of the Education for Persons with Special Educational Needs Act. This will include the extension of coverage by the National Educational Psychological Service to all primary and post-primary schools by the end of 2009.

An increase of €40 million to cover the full-year costs of additional special needs assistants (SNAs) in the system in September 2008, provision for additional posts in September 2009, and full-year cost of pay increases awarded.

Student services charge

Third-level funding allocations allow for increases in the student services charge in 2009/10 to up to €1,500 in individual institutions.

Post-primary school transport

The post-primary school transport charge is increasing from an annual fee of €168 for junior cycle children and €234 for senior cycle children (payable on a term-by-term basis) to a single annual fee of €300 for eligible post-primary children first payable in summer 2009. The maximum amount payable per single family, regardless of the number of children using the school transport system, will be €650 annually.

Staffing of schools

The mechanism used to allocate classroom teachers to primary schools is the staffing schedule and, with effect from September 2009, the enrolment bands will be based on an average of 28 pupils per class rather than the current 27 pupils per class. In the case of post-primary schools, the allocation basis will be altered by one point with effect from September 2009 from the current 18 to 1 basis to a revised basis of 19 to 1. In the case of fee-charging post-primary schools, there will be an additional one-point adjustment.

The ceiling of 2 on the number of language support teachers per school is being re-imposed, with some alleviation for the position of those schools where there is a significant concentration of newcomer pupils as a proportion of the overall pupil enrolment.

Abolition of school-related grants

A number of grants, mainly school related, are being abolished or scaled back realising savings of €26.6million per annum.

Adult and further education

There is a reduction in the provision of 500 places on the Back to Education Initiative – reducing the total number of places to 9,000. The number of places provided in Senior Traveller Training Centres will be reduced by approximately 100 – there are currently 1,084 places provided.

Allowances to participants in VTOS, Youthreach and Senior Traveller Training Centres will be increased in line with the appropriate social welfare rates or FAS trainee allowances.

Employment

Research and development

Capital expenditure of €309 million is being made available to continue the implementation of the Strategy for Science, Technology and Innovation (SSTI) as part of the Government’s commitment to promoting a competitive, knowledge-based economy. This provision will, among other things, continue to support the work of Enterprise Ireland (€127 million) in driving innovation and research and development (R& D) in companies, and will maintain the commitment to world class research through the capital allocation of €179 million to Science Foundation Ireland.

The R& D tax credit available to companies will increase from 20% to 25%.

Enterprise sector

€90 million capital expenditure allocated to IDA Ireland to attract foreign direct investment and a further €48.4 million capital allocated to Enterprise Ireland for the indigenous sector.

Increased funding for small business

Supports for small business, through the County and City Enterprise Boards, will increase next year by almost €3 million, or 9%, to €34.8 million.

3 year tax exemption for start-up companies

New start-up companies which commence trading in 2009 will be exempt from tax, including capital gains, in each of the first three years to the extent that their tax liability in the year does not exceed €40,000.

Levy on car parking facilities provided to employees by their employers

A flat rate levy of €200 per annum will be charged on employees whose employer provides them with car parking facilities. The levy will be confined to employer provided car parking facilities situated in the main urban centres.

Cycle to work scheme

From 1 January 2009, the provision of bicycles and associated safety equipment by employers to employees who agree to use the bicycles to cycle to work will be treated as a tax exempt benefit-in-kind. The exemption may only apply once in any 5 year period in respect of any employee. There will be a limit on the value of such purchases of €1,000 for each employee. The scheme may also be implemented through their salary sacrifice arrangements, whereby an employee agrees to forego part of their salary to cover the costs associated with the purchase of the bicycle and associated safety equipment. Where such salary sacrifice arrangements are implemented, they must be completed over a maximum period of twelve months.

Employee PRSI annual ceiling

As from 1 January 2009, the PRSI contribution ceiling will increase from €50,700 to €52,000.

FÁS

Over €1 billion in current expenditure has been provided for FÁS in 2009. In particular, resources will be deployed within the FÁS allocation to assist those who have recently become unemployed. Within FÁS’s budget:

  • Funding for Community Employment and Job Initiative schemes will be increased by 2%, from €439 million to €450 million. This will enable FAS to continue to support a minimum of 22,500 participants on these programmes next year.
  • Funding for FAS’s services to people with disabilities is also being increased by 2% on the projected 2008 outturn. A total of €77.7 million in FAS’s 2009 budget is ringfenced for specific employment and training programmes for people with disabilities.
  • The allocation from the National Training Fund for training the unemployed has been increased by €9.5 million, or 5% in 2009, to €208.3 million. This allocation will, in particular, help workers who have recently lost their jobs, including redundant apprentices, through training and re-skilling.

Funding for upskilling those in employment in 2009 will still amount to €168.5 million and will be delivered primarily by FÁS and Skillnets.

Other allocations

The allocation to the National Employment Rights Authority for 2009 is €9.7 million.

The Health and Safety Authority has been allocated a budget of €23.7 million for next year.

Rural Social Scheme

€50.4m is being made available in 2009 to meet the costs of the Rural Social Scheme. This scheme provides a supplementary income for low-income farming and fishing families while delivering useful services to the local communities.

Contribution limit for pensions

The annual earnings limit for determining maximum tax-relievable contributions for pension purposes is being set at €150,000 for 2009 as compared with the 2008 limit of €275,239.

Indexation of maximum allowable pension funds

The adjustment, in line with an earnings index, of the maximum allowable thresholds for pension funds on retirement (the standard and personal fund thresholds) will not be made for 2009.

Other areas

Farmers

Funding

€159 million for agricultural research, education and training, including €122 million for Teagasc, to encourage innovation at farm and industry level.

€632.2 million for the Land Mobility, Compensatory Allowances in Disadvantaged Areas and Rural Environmental Protection Schemes under the Rural Development Programme; the provision for REPS is increased to €355 million.

€127.7 million for measures to support forestry and the bio-energy sector.

A further €125 million for the Farm Waste Management Scheme which will bring total expenditure under the scheme in 2009 to over €615 million;

€117.7 million to support the fisheries sector, including research.

Reductions in funding

The main area where reductions have been applied is in payments under the Scheme of Compensatory Allowances in Disadvantaged Areas. Adjustments are also being introduced to the Breeding and Welfare Scheme for Suckler Cows while entry to the Early Retirement and Young Farmer Installation Scheme is suspended. There are also reductions in Grants-in-Aid of between 8% and 9% for Teagasc, An Bord Bia, the Marine Institute, Bord Iascaigh Mhara and the Sea Fisheries Protection Authority and a reduced provision for certain capital investment schemes.

Farmer taxation

Farmer’s flat rate addition

The farmer’s flat rate addition is being maintained at 5.2% for 2009. The flat rate is designed to recoup non-VAT registered farmers for the VAT they incur on their inputs.

Stamp duty relief for farmers

Stamp duty relief is available for farmers acquiring land, who are aged under 35 and have specific agricultural training. The relief is due to terminate on 31 December 2008. This relief is now being extended for 4 years and the relief will apply in respect of instruments executed no later than 31 December 2012.

Stamp duty relief is available to a farmer consolidating his/her holding. The relief is due to terminate on 30 June 2009 and this termination date will be extended to 30 June 2011.

Farmers stock relief

Provision is being made to renew the 25% general farming stock relief and the special 100% stock relief for young trained farmers for a further 2 years to 31 December 2010.

Farm pollution control relief

Provision is being made to extend the 31 December 2008 deadline of the scheme of capital allowances for expenditure on certain pollution control measures relief to 31 December 2010.

Justice

Capital expenditure of €156 million is being made available to fund the ongoing courts and prisons building programmes, a new state pathology laboratory and the Garda National Digital Radio project.

Funding on the current side is continuing to be provided for all existing programmes including services relating to equality, disability, asylum, probation, legal aid and an additional €10 million for the provision of speed cameras.

LEADER Programme

Capital expenditure under the LEADER Rural Economy Development Programme 2007-2013 is being increased from €16 million to €27 million in 2009. This will facilitate investment in rural communities throughout the country.

Dormant accounts

There is increased provision from the Dormant Account Fund of €8 million for initiatives tackling economic & social disadvantage; this will facilitate the continued rollout of projects in RAPID areas.

Voluntary and co-operative housing sector

An additional funding of €10million is provided for the Voluntary and Co-operative housing sector under the Capital Loans and Subsidies scheme from the Department of Environment, Heritage and Local Government.

Under the same scheme a further 3million is provided for the provision of homeless accommodation.

Arts, Sports and Tourism

There are reductions in funding for a range of cultural and sporting projects. In particular, a reduction is being made in the allocation for the Horse and Greyhound Racing Fund to €69.7 million in 2009, from €76.3 million in 2008. The arrangements are being ended whereby the annual payment to the Fund is automatically calculated by reference to the previous year’s betting duty or the contribution to the Fund in the year 2000 as adjusted for inflation.

The Irish Museum of Modern Art, the Crawford Art Gallery and the National Gallery of Ireland are to be combined while retaining separate identities.

The National Archives and the Irish Manuscripts Commission are to be merged into the National Library.

Culture Ireland is to remain a part of the Department of Arts, Sports and Tourism, rather than be established as a statutory agency.

Rationalisation of State agencies

Various State bodies are to be merged or abolished.

Find out more in Annex D to the Budget documents, Rationalisation of State Agencies (pdf).

Page edited: 23 June 2010

Related Documents

  • Budget 2008
    Budget 2008 was announced on 5 December 2007. Summary of the main changes. This document is updated regularly during early December.
  • Budget 2007
    Budget 2007 was announced on 6 December 2006. Summary of the main changes.
  • Budget 2010
    Budget 2010 was announced on 9 December 2009. Summary of the main changes.

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