Budget 2014 Summary

The main relevant changes announced in the Budget 2013, are as follows:

Pension levy to increase to 0.75% for 2014 and continue at 0.15% for 2015.

Levy is increased and continued for 2015, in spite of a commitment by the Minister in last year’s Budget to terminate the levy in 2014.

Reduction in the Standard Fund Threshold from €2.3m to €2m from 1st January 2014

Personal Fund Threshold (PFT) for those with accrued retirement benefits over €2m on the 1st of January 2014, to a maximum PFT of €2.3m. Clients near the €2m threshold who anticipate retiring shortly may still be able to continue funding up to the 31st of December 2013 to get a PFT. We may have to wait for final details in the Finance Bill, to confirm this.

Defined Benefit (DB) pensions to be valued in the future at new higher multiples varying by age, but only for DB pensions accrued from the 1st of January 2014.

You will need financial advice on when to stop their pension funding.

Limit on pension lump sums taxable at standard rate may be reduced from €375k to €300k with effect from the 1st of January 2014

No change announced in the €200k limit on pension tax free lump sums.

Change in pension tax relief backdating dates

Because of a planned change to the Pay & File deadline in 2014, clients need to budget for earlier payment of backdated pension contributions in 2014, if 2013 relief has not already been maximised by then.

DIRT/Exit Tax increased to a new unified 41% rate from the 1st of January 2014.

The change impacts more negatively on deposits as the ordinary DIRT rate (applied where interest is credited at least annually) of 33% increases by 8% to 41%, whereas the exit tax rate on investment policies increases by 5% from 36% to 41%.

Clients with investment gains on investment bonds who intend making a partial or total encashment shortly, might consider making such an encashment before the 31st of December 2013 to benefit from a lower 36% exit tax rate, before it increases to 41% in 2014.

Extension of Capital Gains Tax (CGT) exemption for property investors.

A CGT exemption for property investors who purchase a property before the 31st of December 2013 and hold it for at least 7 years, is being extended to cover properties purchased in 2014.

Medical insurance tax relief capped

Standard rate income tax relief on medical insurance premiums will be capped at €1,000 pa for an adult and €500 pa for a child from the 16th of October 2013.

Scroll to Top