Budget 2017 : 5 Key Takeaways
Budget 2017 has gifted us a range of ‘small sweeties’ but sees no major changes to how the government runs its finances (or controls ours). Here are 5 key changes - and what you should do about them.
1. Keep contributing to a pension
The State Pension may have been increased by €5 a week (whoopie doo!) but let's not plan that Mediterranean cruise just yet. Much more importantly, continued pension contribution tax relief remains. It’s one of the last few meaningful tax reliefs so now is not the time to stop thinking about saving for retirement.
2. Pay off debt / Save more
A reduction in USC (and a few other very minor tweaks to tax credits) will result in us all seeing a little bit more money in our pocket. This may provide an opportunity firstly, to begin to pay off expensive debt, and secondly to save more. The DIRT (tax on savings) reduction from 41% to 39% is pretty irrelevant with deposit rates so low so once you have an appropriate emergency cash reserve you really do need to consider a higher earning medium to long term investment strategy.
3. Buy your first home
The controversial Help to Buy Scheme offers first time buyers a tax refund of 5% of the value of a new home worth up to €600,000 but with a maximum rebate (from income tax already paid) of €20,000. Money Smart is a strong believer that you should own your own home (see our blog on this here) so this new incentive will hopefully help.
4. Maximise the value of your home
The Home Renovation Incentive Scheme has been extended for two more years. This popular tax credit effectively gives you full relief against the 13.5% VAT rate on home repairs or improvements. On top of that, the very practical Rent a Room (Tax) Relief rises to €14,000 per annum, although Airbnb continues to be excluded.
5. Think about your next of kin
While the rise in the parent to child inheritance tax threshold to €310k is welcome, the continued inclusion of the family home in the taxable estate and the unchanged 33% inheritance tax rate ensures that the many of us will also be passing on a very large tax bill to our children. Thus the need for financial planning advice on how to minimise this liability remains as important as ever.
Talk to Money Smart about a post budget personal finance audit by calling 01 276 0006 or emailing [email protected].