Watch List for Possible Tax Changes in Budget 2022

The Tax Strategy Group (TSG) is an interdepartmental committee with membership from leading government departments and the Revenue Commissioners. Its purpose is to provide options for consideration in the context of the budget in the medium and long term. The 2021 TSG papers have been published and although the TSG is not a decision-making body it does provide a useful indication of current thinking among senior civil servants.
Some interesting proposals/comments contained in the papers include:
On Gift Tax 

  • Increasing the annual gift tax exemption from €3,000 to €5,000
  • Changing the basis of calculating gift tax on interest free loans so that the gift would be calculated on borrowing rates and not deposit rates 

On CGT and Stamp Duty 

  • There is no compelling case at present to reduce the 33% CGT rate
  • Reduce the cut-off point for the 2% stamp duty rate to, say, €750,000 for residential properties
  • Apply the 2% rate to the full value of more expensive houses
  • Stamp duty surcharges on the purchase of two and subsequent residential properties and residential properties bought by non-residents

On Income Tax and PRSI 

  • The TSG notes the undertaking made in the Programme for Government not to increase income tax or USC rates and the commitment that from Budget 2022 onwards in the event of a incomes rising as the economy recovers that credits and tax bands will be indexed linked to earnings.
  • Increase the PRSI rate from 4% to 12.55% for self-employed contributors
  • Increase the employer’s rate of PRSI to 12.55% and phase out the lower 8.8% rate.
  • Increase the rate of employee PRSI to 5.5% and reduce the threshold above which employees are required to pay PRSI.
  • A review of the Help to Buy Scheme including options to extend the scheme beyond the 31 December 2021 expiry date.
  • Enhancing tax arrangements to incentivise home working is unlikely to have a positive impact on the uptake of remote working. Nonetheless in the context of Government policy to support and facilitate remote working it may be considered appropriate to legislate for tax relief for remote workers.  Options put forward include the introduction of a per-diem working from home tax relief, a remote workers tax credit and/or increasing the percentage limits for home costs which can be claimed.

This summary is intended as a general guide. No action should be taken without obtaining professional taxation advice.

If you have any queries, please do not hesitate to contact Purcell McQuillan Tax Partners Ltd on 01 668 2700 or email your usual PMQ contact.

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