Budget 2008 - Income Tax Changes

In his Budget Statement on 5 December 2007, the Minister for Finance announced a number of changes to the personal tax system. Some of these are as outlined below. Please contact our offices directly for more detailed information.

Tax Credits

The table below outlines increases for 2008.

Tax Credit	2007	2008
Single Person	1,760	1,830
Married person	3,520	3,660
PAYE Credit	1,760	1,830
Widowed person (without dependant children)	2,310	2,430
Incapacitated Child Credit Max	3,000	3,660
One parent family	1,760	1,830
Blind Tax Credit:
Single Person	1,760	1,830
One Spouse Blind	1,760	1,830
Both Spouses Blind	3,520	3,660
Widowed Parent:
Bereaved in 2007	-	4,000
Bereaved in 2006	3,750	3,500
Bereaved in 2005	3,250	3,000
Bereaved in 2004	2,750	2,500
Bereaved in 2003	2,250	2,000
Bereaved in 2002	1,750	-
Age Tax Credit:
Single/Widowed	275	325
Married	550	650
Dependent relative	80	80
Carers credit	770	900

The following reliefs remain unchanged:

Relief (allowed at the taxpayer's top rate of tax)	2007 € Max	2008 € Max
Employing a carer	50,000	50,000

Changes to Standard Rated Reliefs are as follows:

(Allowed at 20% rate band)

Relief	2007 € Max	2008 € Max
Rent Tax Relief:
Single aged under 55	1,800	2,000
Married/Widowed aged under 55	3,600	4,000
Single aged 55 & over	3,600	4,000
Married/Widowed aged 55 & over	7,200	8,000
Trade Union Subscriptions	300	350

Services Charges

Relief on service charges remains unchanged. A maximum of €400 tax relief is granted (at 20% tax rate) in 2008 for charges paid in the year 2007.

Rent-a-Room Scheme

The limit of the exemption from income tax which applies to rent received, where a person rents out a room or rooms in his or her principle private residence, is to be increased from €7,620 to €10,000.

Tax Rates and Tax Bands

The tax rates remain unchanged at 20% and 41%. The standard rate tax band (20%) has been widened.

The table below sets out the tax rates and bands.

Personal Circumstances	2007 €	2008 €
Single/Widowed without dependant children	34,000@20% Balance@41%	35,400@20% Balance@41%
Single/Widowed qualifying for One Parent Family Tax Credit	38,000@20% Balance@41%	39,400@20% Balance@41%
Married Couple one spouse with Income	43,000@20% Balance@41%	44,400@20% Balance@41%
Married Couple both spouses with Income	43,000 @ 20% with increase of 25,000 max. Balance @ 41%	44,400 @ 20% with increase of 26,400 max. Balance @ 41%

Exemption Limits

The exemption limits for persons aged 65 years and over have been increased as indicated in the table below:

Personal Circumstances	2007 €	2008 €
Single/Widowed 65 years of age & over	19,000	20,000
Married Couple 65 years of age & over	38,000	40,000

The limits for Single/Widowed persons aged under 65 and Married couples aged under 65 remain unchanged at €5,210 and €10,420 respectively.

Marginal Relief will continue to apply where income does not greatly exceed the relevant exemption limit.

The above exemption limits are increased by €575 for each of the first two dependent children and by €830 for the third and subsequent children.

Tax Relief at Source – Mortgage Interest Relief

The current annual ceiling on the amount of interest that can be allowed on a mortgage is being increased with effect from 1 January 2008 for first-time buyers from €8,000/€16,000 single/married to €10,000/€20,000 single/married. The additional relief will be available for the first seven years for which there is an entitlement to mortgage interest relief.

The ceiling for non-first-time buyers remains unchanged at €3,000/€6,000 for single/married.

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 increases in interest rates, the specified rate in respect of home loans is being increased from 4.5% to 5.5% and the specified rate in respect of other loans is being increased from 12% to 13%. These changes will take effect from 1 January 2008.