Budget 2011 - Overview

The budget announced today by Minister for Finance, Brian Lenihan is the first instalment of the government’s four year recovery plan. Every income group is hit as the budget increases taxes, restricts reliefs and cuts benefits. Middle to low income earners and families appear to suffer the most. Income tax rates remain unchanged, but a reduction in tax credits and the standard rate band will mean more taxes for all. Child benefit is reduced by €10 for each child with an additional €10 reduction for the third child.

Property tax reliefs, including rural renewal and student accommodation are being restricted and will eventually be phased out by 2014 for landlords. We anticipate a legal challenge in the courts on the restrictions of these “legacy reliefs”. Owner occupier reliefs are unaffected by these changes. Pension relief is also restricted in 2011.

State pensions remain unchanged. All other social welfare payments, including jobseekers, carers and disability allowances are reduced by 4% or €8 per week. Minimum wage is reduced by €1 from €8.65 to €7.65. The current employee’s PRSI contribution ceiling is to be abolished while PRSI (Pay Related Social Insurance) for the self-employed and top earning public servants will be increased.

A flat rate of 1% stamp duty will be applied to all transactions of residential property valued up to €1 million and 2% on amounts above €1 million. Stamp duty reliefs on residential property transactions are abolished. No changes were announced for stamp duty on land or commercial property.

Mr Lenihan said there would be no change to Ireland's 12.5 per cent corporation tax rate, and the three-year corporation tax exemption for start-up companies would be maintained. The Government's car scrappage scheme is to be extended to June 2011.

We have summarised the main provisions contained in the Minister’s speech which we hope you find useful, and take this opportunity to wish you a merry Christmas and a happy new year.