This year, the Minister announced a significant number of positive changes which will result in an increase in take home pay for most of our Public Sector customers.
To estimate how much your annual take home pay will increase from the 1st January 2016, please see our table below*.
The above table is based on a single, PAYE Public Sector worker and only takes into account the reduction in the Universal Social Charge (USC)*. If you have dependent children or a spouse who is self-employed, you will get a bit more back in your pocket.
A single teacher with 1 child
Mary is a single 34 year old teacher earning a salary of €42,000.
- She has 1 dependent child.
- She will see a reduction in her annual USC bill of €481, due to the changes in the USC rates.
- There is no change to the Standard Rate Cut-Off point or the Tax Rate bands.
- She will see an increase of €60 (€5 per month) to the Child Benefit payment.
Mary will get an extra €541 per annum.
A Public Sector employee married to a self-employed person
Séamus is a Public Sector employee, earning €38,000.
- He is married to Deirdre who is self-employed with a taxable profit of €7,000.
- They have 2 dependent children and are jointly assessed.
- Séamus will see an increase in his annual take home pay of €421 due to the changes in USC.
- Deirdre will now benefit from the ‘Earned Income Tax Credit’ of €550 on her self-employed income. She can also claim the increased ‘Home Carer Tax Credit’ of €1,000, as her income does not exceed €7,200.
- They will get an increase of €120 per year (€10 per month) in Child Benefit.
As a family, they will get an extra €2,091 per annum.
Retired Public Sector employees
- Will see an increase in the Social Welfare Pension of €3 per week, which will result in an extra €156 per year.
- The Christmas bonus has also been reintroduced at 75% of the weekly payment. This means a Pensioner on the current rate of €230 per week will receive a bonus of €173.
- People aged 70 and over and/or medical card holders, with income under €60,000 will have a maximum rate of 3% USC. If you fall into this category and have an income over €60,000, you be liable to the standard USC rates.
1. Changes to Universal Social Charge (USC): The changes in USC will benefit most of our customers. The entry threshold for USC was increased from €12,012 to €13,000. In addition, the USC rates were decreased as follows:
- Earning €0 - €12,012:.......................Pay USC at 1% (reduced from 1.5%).
- Earning €12,013 - €18,668:...............Pay USC at 3% (reduced from 3.5%).
- Earning €18,669 - €70,044: ..............Pay USC at 5.5% (reduced from 7%).
- Retired people aged 70 and over/medical card holders, with income under €60,000 will only be liable to USC at 3%.
- Retired people aged 70 and over/medical card holders, with income over €60,000 will be liable to the standard USC rates.
2. How will the budget benefit Families?
- Child Benefit: was increased by €5 per month (from €135 to €140).
- FREE Pre-School Programme: Announced for children aged 3 to 5½ years old (or school-going age).
- FREE GP Care: To be extended to children under age 12 (subject to successful negotiation with doctor representatives).
- Home Carer Tax Credit: This will increase by €190 annually to bring it up to €1,000 per year plus there will also be an increase in the home carer’s income threshold from €5,080 to €7,200.
- Paternity Leave: Statutory Paternity Leave of two weeks will be introduced from September 2016.
- Capital Acquisitions Tax: The “Group A” tax-free threshold, which broadly applies to transfers between parents and their children, is being increased from €225,000 to €280,000.
- Employee’s PRSI: There was a tapered PRSI credit introduced with a maximum level of €12 per week. Relief commences at income of €352.01 per week and tapers out at a rate of 1/6th of income in excess of this threshold. Relief fully tapers out as income reaches €424 per week. This change is to benefit people earning an annual salary between €18,304 to €22,048.
- Employer’s PRSI: An increase from €356.01 to €376.01 in the weekly threshold at which liability to Employer’s PRSI will increase from 8.5% to 10.75% on all earnings.
- A new “Earned Income Tax Credit” to the value of €550 was announced for self-employed people that do not have access to the PAYE credit.
- Entrepreneurs will benefit from a new, reduced Capital Gains Tax (CGT) rate of 20%. This reduced rate of CGT applies to disposals of businesses up to a maximum ceiling of €1 million in chargeable gains.
- Additional CAT Agricultural Relief was also announced for Farmers as well as reduced rates of Commercial Motor Tax.
5. Other announcements
- Pension Levy: Will end this year and will not apply in 2016 (applies to Private Sector Pensions only).
- Local Property Tax: There will be no increase in this tax for 2016, 2017 or 2018.
- Home Renovation Incentive: Extended to 31st December 2016.
- Fuel Allowance: To increase by €2.50 per week to €22.50 per week.
- Respite Care Grant: To be restored to €1,700 (paid to carers in receipt of the carer’s allowance/benefit).
- Family Income Supplement: An increase in the threshold by €5 per week for families with one child and by €10 per week for families with two or more children.
- ATM charge: Stamp duty on combined debit/credit cards was abolished and a 12 cent ATM withdrawal fee was introduced (capped at €2.50/€5 per annum depending on the card used).
- Tourism Sector: 9% VAT rate to remain in place.
- Cigarettes: Increased by 50 cent with effect from 14th October 2015.
With over 40 years' experience in the industry, we have seen many Budgets and know how they can affect our customers. Our Consultants are highly trained experts. If you require additional advice on your finances following the Budget, specific to your situation as a Public Sector employee, you can request an appointment with an expert Cornmarket Consultant by clicking here. Alternatively, phone our dedicated customer contact team on (01) 420 0991.
*Figures in the table above are due to the reduction in the Universal Social Charge (USC) and are based on an annual income for a single, PAYE worker. These figures are for illustrative purposes only and do not account for tax relievable compulsory deductions, e.g. Superannuation and Spouses’ and Children’s Scheme deductions. Please note: there may be further changes to the above following the Finance Bill. Every effort has been made to ensure that the information provided here is accurate and up-to-date (14th October 2015). The information provided is of a general nature and may not address the specific circumstances of a particular individual. Cornmarket does not accept any liability arising from any errors or omissions.