Budget 2019

This document relates to the Budget announced in 2018. You can read our summary of Budget 2020, announced on 8 October 2019.

Budget 2019 was announced on Tuesday, 9 October 2018.

This document sets out the main changes in taxation, social welfare, health, housing, education, employment and other areas.

It is an overview and not a complete statement of the measures announced in Budget 2019.

Some of the changes announced in the Budget come into effect immediately. Others take effect from the beginning of January 2019 or later in 2019. Many others have to be finalised before coming into effect.

Some elements of these measures may change when the legislation required to bring them into effect is enacted.

For a full list of the Budget changes, please see the Department of Finance and Department of Public Expenditure and Reform website: budget.gov.ie and at gov.ie/budget.

Measures to prepare for Brexit, including the possibility of a “no-deal” Brexit, are being put in place across government departments. Funding of over €110 million has been allocated to Brexit measures. These include:

Agriculture, Food and the Marine: a package to address challenges arising from Brexit in the farm and food sectors, including funding for Bord Bia to support Brexit-related promotion and development work, investment in food innovation facilities, and investment in food companies to improve productivity and competitiveness.

Business, Enterprise and Innovation: loans under a new Future Growth Scheme to allow businesses (including farmers) to make strategic investments after Brexit; expanding the global footprint of enterprise agencies to take advantage of opportunities that may arise from Brexit; IDA property investment in further regional locations; strengthening and resourcing of the Office of the Director of Corporate Enforcement; and resourcing the Local Enterprise Offices to help fund local and indigenous enterprises to meet the challenge of Brexit.

Foreign Affairs and Trade: extra resources to the Passport Service to meet rising demand, including Brexit-specific increases; developing a whole-of-Government Brexit Preparedness Communications Plan; increasing support to organisations that promote reconciliation and understanding between communities in Northern Ireland, and between North and South; and ongoing implementation of the Global Ireland Initiative.

Transport, Tourism and Sport: programme to support the tourism industry, help prepare it to address the impact of Brexit and grow alternative markets in the context of Brexit and a decline in UK visitors.

Education and Skills: upskilling and reskilling for sectors and regions most vulnerable to Brexit.

Income tax

The threshold for the higher rate of income tax (40%) will increase by €750. This means, for example, an increase from €34,550 to €35,300 for single individuals and an increase from €43,550 to €44,300 for married couples with one earner (from 1 January 2019).

The Home Carer Tax Credit will increase from €1,200 to €1,500.

The Earned Income Tax Credit for self-employed people will increase from €1,150 to €1,350.

Revenue’s updated PAYE system will be fully operational from 1 January 2019.

VAT

The VAT rate for the tourism sector will increase from 9% to 13.5% (from 1 January 2019).

The rate for newspapers and sporting facilities will continue at 9%. The VAT rate for e-books and electronically supplied newspapers will be reduced from 23% to 9% (from 1 January 2019).

Local Property Tax (LPT)

A review of the Local Property Tax is currently underway and an update will be provided later this year.

Universal Social Charge (USC)

The 4.75% rate of USC will reduce to 4.5%.

The ceiling of the 2% band will increase from €19,372 to €19,874, so that the salary of a full-time worker on the minimum wage will remain outside the higher rates of USC.

Incomes of €13,000 or less will continue to be exempt from USC in 2019. Once your income is over this limit, the following rates will apply (from 1 January 2019):

• €0 to €12,012 @ 0.5%
• €12,012 to €19,874 @ 2%
• €19,874 to €70,044 @ 4.5%
• €70,044+ @ 8%
• Self-employed income over €100,000: 3% surcharge

The weekly income threshold for the higher rate of employer’s PRSI will increase from €376 to €386 to ensure that there is no incentive to reduce the working hours for a full-time employee on the increased minimum wage.

Capital Acquisitions Tax (CAT)

The Group A tax-free threshold, which applies primarily to gifts and inheritances from parents to their children, will be increased from €310,000 to €320,000. This increase applies to gifts or inheritances received on or after 10 October 2018.

Stamp duty

The exemption for young trained farmers from stamp duty on agricultural land transactions continues for another 3 years to the end of 2021.

Tobacco products tax

From midnight on 9 October 2018, the excise duty on a packet of 20 cigarettes will increase by 50 cent (including VAT) with a pro-rata increase on other tobacco products. There will be an additional 25 cent on roll-your-own tobacco.

There is an increase in the minimum excise duty on tobacco products, so that all cigarettes sold below €11 have the same excise applied as those sold at €11 and above.

Betting duty

The duty on bets placed by customers in the State will increase from 1% to 2% for bookmakers, and from 15% to 25% on the commissions earned by betting intermediaries.

The total social protection budget in 2019 will be €20.5 billion.

Increases in social welfare payments

The maximum rate of all weekly social welfare payments will increase by €5 per week with proportional increases for qualified adults and people on reduced rates of payment. This also applies to employment programmes such as Community Employment (CE), Tús and the Rural Social Scheme (from week beginning 25 March 2019).

People aged 25 and under who are getting a reduced rate of Jobseeker’s Allowance will get the full €5 increase (from week beginning 25 March 2019).

The weekly rate for a qualified child will increase by €2.20 from €31.80 to €34 for children under 12 years of age. It will increase by €5.20 from €31.80 to €37 for children aged 12 years and over (from week beginning 25 March 2019).

Christmas Bonus

A Christmas Bonus of 100% will be paid in December 2018 to people getting a long-term social welfare payment (minimum payment of €20). (December 2018)

Parental Benefit

A new scheme will be introduced providing 2 weeks’ Parental Benefit for insured employees and self-employed people. It will be paid at the same rate as Maternity Benefit and Paternity Benefit (from November 2019).

Self-employed people

Jobseeker’s Benefit will be extended to self-employed people (late 2019).

One-parent families

The earnings disregard for the One-Parent Family Payment and the Jobseeker’s Transition payment will increase by €20 per week, from €130 to €150 per week (from 28 March 2019).

Working Family Payment

A maintenance disregard of €95.23 per week for housing costs, with the remainder assessed at 50%, will be introduced for the Working Family Payment to bring it in line with other social assistance schemes.

Back to School Clothing and Footwear Allowance

The Back to School Clothing and Footwear Allowance will increase by €25 per child, from €125 to €150 for children aged 4-11 and from €250 to €275 for children aged 12-22 in full-time second-level education.

Fuel Allowance

The Fuel Allowance season will be extended by 1 week, from 27 to 28 weeks. The extra week will apply to the current fuel season.

Domiciliary Care Allowance

Domiciliary Care Allowance will continue to be paid for 3 months in cases where the child being cared for has died (from 1 January 2019).

Cost of disability

€300,000 will be provided to commission research on the cost of living with a disability.

Payments to people in direct provision

Daily Expenses Allowance (formerly called a Direct Provision Allowance) weekly rate will increase from €21.60 to €29.80 for children and €38.80 for adults (from week beginning 25 March 2019).

Employer’s PRSI

The weekly threshold for employer’s PRSI will increase from €376 to €386 (from 1 January 2019).

The National Training Fund Levy (NTFL), collected alongside Employer PRSI for Classes A and H, will increase by 0.1% from 0.8% to 0.9% (from 1 January 2019).

Community Employment

Additional funding of €2 million for materials will be made available in 2019.

A total of €2.3 billion is allocated to the Department of Housing, Planning and Local Government for housing in 2019. In addition, local authorities will spend an extra €93 million on housing programmes, funded from Local Property Tax surpluses. This brings the total spending on housing to almost €2.4 billion for 2019.

Social housing support

€1.25 billion has been allocated for the delivery of 10,000 new social homes in 2019. These homes will be delivered through a combination of construction, acquisition and leasing.

An increase of €40 million has been allocated to the Social Housing Current Expenditure Programme, bringing the total to €155 million. This will allow the continued delivery of 14,000 leased homes and 4,800 additional social homes in 2019.

Funding for the Housing Assistance Payment (HAP) scheme is increasing by €121 million to €423 million. This will provide an additional 16,760 HAP tenancies in 2019, as well as supporting those already on the HAP scheme.

Funding of €134 million is allocated to the Rental Accommodation Scheme (RAS) to provide for an additional 600 new tenancies under the scheme, as well as the ongoing cost of households already supported under RAS.

Funding of €13 million is allocated for a range of Traveller-specific accommodation schemes.

The energy efficiency programme will receive funding of €25 million in 2019 to improve the energy efficiency of 9,000 social homes.

Supports for homeless people

The current allocation for homeless services will increase by €30 million, to €146 million in 2019. This will be used to fund emergency accommodation and help people transition from homelessness into long-term housing.

It is intended that 5,000 adults will exit homelessness in 2019.

The Housing First initiative and the Family Hub programme will continue to be funded and rolled out in 2019.

An extra €60 million will be made available to fund additional emergency accommodation and family hubs for winter 2018.

People in mortgage arrears

€23 million has been allocated to the mortgage to rent scheme for 2019. This will allow over 400 households to avail of the scheme, which lets people in mortgage difficulty switch from owning their home to renting their home as a social housing tenant.

Affordability

€89 million is provided in 2019 for a Serviced Sites Fund. This fund will deliver at least 6,000 subsidised affordable homes on local authority sites over its lifetime. The scheme will apply to new homes for single people earning up to €50,000 and couples earning up to €75,000.

€41 million has been allocated to the Local Infrastructure Housing Activation Fund (LIHAF) in 2019. This fund accelerates the provision of public infrastructure (such as roads and bridges) to allow for the development of land for housing, some of which will be used for social and affordable homes.

Regeneration, adaptations and remediation

The National Regeneration Programme will receive funding of €72 million.

Funding for housing adaptation grants is increased to €57 million to enable up to 11,800 home adaptations for people with disabilities and older people.

Funding of €32 million is allocated for the remediation of a further 460 houses affected by pyrite.

Private rented housing

The interest relief that landlords can claim against mortgages used to buy, improve or repair a rental property has increased from 85% to 100%. (This will be effective from 1 January 2019).

An additional €4.6 million will be provided to the Residential Tenancies Board (RTB) in 2019, bringing its allocation to €11.5 million. This increase will help the RTB to enforce rent caps and expand its programme of rental inspections.

The Housing Agency will also receive additional funding of €2.8 million, bringing its funding for 2019 to €10 million. This additional budget reflects the Housing Agency’s expanded role in the delivery of housing supports and services.

National Minimum Wage

The national minimum wage will increase from €9.55 per hour to €9.80 per hour (from 1 January 2019).

Key Employee Engagement Programme (KEEP)

KEEP facilitates the use of a share-based remuneration by small and medium-sized enterprises (SMEs) to attract key employees. It is available for qualifying share options granted between 1 January 2018 and 31 December 2023. Budget 2019 has introduced changes to help SMEs to compete for skilled staff, which include:

• Increased ceiling on maximum annual market value of shares that may be awarded to equal the amount of the salary (up from 50%)
• Introduction of a lifetime limit
• Increased overall value of options that can be awarded per employee from €250,000 to €300,000

Earned Income Tax Credit

The Earned Income Tax Credit will increase from €1,150 to €1,350. This is relevant for taxpayers earning self-employed trading or professional income in certain cases and for business owners or managers who are not eligible for a Pay As You Earn (PAYE) credit on their salary income.

VAT rate

The VAT rate on the tourism and services sector will increase from 9% to 13.5% with the exception of newspapers and sporting facilities (from 1 January 2019).

Future Growth Loan Scheme

A new Future Growth Loan Scheme will offer loans over 7-10 years to allow businesses make strategic investments after Brexit. The scheme will be delivered by the Strategic Banking Corporation of Ireland through participating finance providers. The scheme will add to the existing supports including the Revised Credit Guarantee Scheme, Microfinance Ireland, the Enterprise Ireland Seed and Venture Capital Scheme and the short-term Brexit Loan Scheme.

Disruptive Technologies Innovation Fund (DTIF)

A €500 million fund will invest in research, development and deployment of disruptive technologies and applications.

Crowdfunding

The Government will start work in conjunction with the Central Bank on the regulation of crowdfunding.

Three Year Start Up Relief (Section 486C)

Three Year Start Up Relief provides corporation tax relief for profit-making start-up companies which create and maintain jobs. The relief is being extended a further three years, until the end of 2021.

Primary and post-primary schools

From September 2019, there will be an extra 372 teaching posts in schools. 271 of these are in response to rising numbers of pupils and 101 are to provide additional special classes.

The standard capitation grant will increase by 5% from September 2019.

A further 950 Special Needs Assistants (SNAs) will be recruited, bringing the total number to over 15,900. The Comprehensive Review of the SNA Scheme is to be implemented and €4.75 million in funding is provided to start this.

Teaching principals in primary schools will get one additional release day. Those in schools with special classes will get four additional release days.

From September 2019, funding will be provided for 23 administrative deputy principal posts in special schools that have a principal and 15 class teachers or more.

10 additional psychologists will be recruited to the National Education Psychological Service to support wellbeing in schools.

A pilot programme to provide hot school meals will be delivered in up to 36 DEIS schools.

Investment projects include new and replacement school buildings. €50 million is allocated to upgrade ICT infrastructure in all schools.

Higher education, further education and skills

3,500 extra places will be provided in higher education. Counselling services in higher education will be strengthened. 1,000 additional Springboard+ places will be introduced.

There will be 1,200 new apprenticeships, 1,100 new traineeship enrolments and 10 new apprenticeship schemes in 2019.

An extra €6 million is provided for Skillnet Ireland and €11 million for employee skills development initiatives.

A new Human Capital Initiative will allocate €300 million over the years 2020-2024 to meet future skills needs and provide extra investment at levels 6-8 in higher education.

Childcare

Extra funding of €89 million allows for increased income thresholds for the Affordable Childcare Scheme and ongoing development of the scheme, along with measures to improve early years inspections.

Tusla

Additional funding of €33m is allocated to Tusla to implement HIQA recommendations on the management of child sexual abuse allegations, deliver on commitments to unaccompanied minor refugees, address cost pressures in private residential and foster care, and allow for further investment in family and domestic, sexual and gender-based violence support services.

The VAT rate on goods and services in the tourism sector will increase from to 13.5% (from January 2019).

€35m is allocated to the Department of Transport, Tourism and Sport to provide targeted supports for the tourism sector, including €4.5 million for regional initiatives such as Ireland’s Hidden Heartlands and the Wild Atlantic Way, and nearly €10 million for the further development of the greenways.

Vehicle Registration Tax (VRT) relief available for hybrid electric vehicles is being extended until the end of 2019.

A 1% VRT surcharge (applied across all VRT bands) is being introduced for diesel engine passenger vehicles registered in the State (from 1 January 2019).

The 0% benefit-in-kind rate for electric vehicles introduced in Budget 2018 is being extended for a period of 3 years, with a cap of €50,000 on the Original Market Value of the vehicle.

A new capital allowances scheme is announced for gas-propelled vehicles and refuelling equipment to encourage the uptake of gas-propelled commercial vehicles as an alternative to diesel. The use of natural gas and biogas as a substitute for diesel is seen as a more environmentally friendly fuel for large vehicles such as HGVs and buses.

The Dublin Airport Authority (DAA) is investing €320 million to enhance capacity at Dublin Airport and €587 million will be invested in the ports of Dublin, Cork and Shannon Foynes to enhance national and international connectivity.

Funding has been allocated to roll out the new Large Scale Sport Infrastructure Fund and to provide support for programmes aimed at increasing participation in sport and supporting high-performance sport.

The prescription charge for medical card holders over the age of 70 will be reduced from €2 per item to €1.50 per item. Prescription charges will be phased out for people in emergency accommodation.

The weekly income limits for the GP visit card will be increased by 10%.

The monthly threshold for the Drugs Payment Scheme will be reduced from €134 to €124.

€9 million is provided to support the introduction of the HPV screening test for cervical cancer and to extend the HPV vaccination programme to boys.

€12 million is provided to develop public health services for termination of pregnancy.

100 new therapy posts will address backlogs in assessment of need applications for children with disabilities and increase access to therapies for children.

Climate change and waste management

The Department of Communications, Climate Action and Environment will invest over €164 million in 2019 to help achieve Ireland’s energy efficiency and renewable energy objectives, in line with the Government’s National Mitigation Plan.

€103.5m will be provided for improvements in grant and premium rates for planting forests.

Additional funding of €70m will be provided for the Environment and Waste Management Programme.

Agriculture

The introduction of the Beef Environmental Efficiency Pilot (BEEP) scheme, to further improve the carbon efficiency of beef production.

€70m will be provided for the Targeted Agriculture Modernisation Scheme (TAMS).

Gas-propelled vehicles and refuelling equipment

Measures will be introduced to encourage the uptake of gas-propelled commercial vehicles as an economic and environmentally friendly alternative to diesel. This includes a new accelerated capital allowances scheme for gas-propelled commercial vehicles and refuelling equipment.

As set out in the National Development Plan, Ireland will no longer purchase diesel-only buses for the urban public service obligation (PSO) bus fleets after July 2019.

A pilot on gender and equality budgeting will be extended to include information on the impact of budgets in the areas of poverty, socioeconomic inequality and disability.

Funding for the Data Protection Commission will increase by €3.5 million to €15.2 million, which will allow for the recruitment of about 40 additional staff.

A Rainy Day Fund, set up with €1.5 billion from the Ireland Strategic Investment Fund, will be supplemented with an annual contribution of €500 million from 2019.

Overseas Development Aid will increase by €110 million to €817 million.