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Budget 2008

The budget newsletter that focuses on benefits and employee-related issues In his fourth budget - relating to the 2008 fiscal year - Minister Cowen maintained as one of his priorities the need to protect the weaker in society by improving social welfare benefits.

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As expected there were no announcements afffecting employee benefits directly - this minimal level of intervention is consistent with the commitment in the recent pensions green paper to consult widely in relation to pension strategy before implementing significant change.

Below is a summary of the key measures we think may be of interest to your employees.

• Tax reliefs
  Most employees will experience minimal change arising from the budget measures, which included moderate upward adjustments to key tax credits and to the width of the lower band (see overleaf). As expected there were no changes to tax rates. PRSI contribution rates also remained unchanged, although the PRSI and levy thresholds and ceilings were increased, again moderately.
• Social welfare
  Once again, the changes to social welfare benefits have been progressive - albeit that the real increases in excess of CPI inflation have been slight.
• Stamp duty
  Stamp duty on residential property has been restructured to a new tiered system under which duties depend on purchase price, as follows:

  -  Purchase price up to €125,000   -  Next €875,000   -  Balance over €1million

  nil 7% 9%

• Motoring
  The Green influence is visible in a restructuring of VRT and road taxes. VRT on vehicles purchased on or after 1 July 2008 will operate on an emissions-linked system, with 7 bands of VRT ranging from 14% to 36% depending on carbon dioxide emission levels. Road tax rates are being increased from 1 February by 91/2% or 11% depending on engine size, and there are proposals to link road taxes to emissions for new cars bought after 1 July 2008.

Social Welfare benefit changes

Revisions to the social welfare benefits of most relevance in the context of pension schemes are set out in the following table.

Tax/Social Welfare Statistics

Tax credits

Mortgage Interest Relief

Standard rate tax bands

Tax exemption limits

^{Readers should note that the purpose of this document is to alert clients to the fact of change and to give a brief summary. Action should not be taken on the basis of this information alone and we recommend you discuss any proposed action with your consultant before proceeding.}