Supplementary Budget 2009 - Overview

Call this budget what you will, but it is introduced by Minister Brian Lenihan at one of the most challenging times ever facing this country. It is one of the toughest budgets in memory, as families with young children and mortgages bear the brunt of tax increases and cutbacks.

In the Minister’s opening remarks he outlined that in the next budget, due in December 2009, he will look to eliminate unnecessary reliefs and review tax exempt incomes. The potential exists for that budget to erode many of the reliefs that are currently available in the areas of gift and inheritance tax and capital gains tax; this could effect areas such as transferring businesses and passing assets on to the next generation. The importance of reviewing your circumstances at this juncture cannot be stressed enough.

Overall, revenue is mainly being raised from personal income by the doubling of income and health levies and the lowering of the relevant thresholds. Capital Gains Tax and Capital Acquisition Tax (Inheritance/Gift tax) rates are increased to 25% with immediate effect and Inheritance/Gift Tax thresholds are reduced by 20%.

Homeowners who took out a home loan more than seven years ago will not be entitled to mortgage interest relief. Property investors will only be able to write off 75% of their interest against tax on rented residential properties. The Minister is also establishing a National Asset Management Agency which will purchase certain loans from banks. The aim of this measure is to stabilise the banking sector and help re-establish lending to business and individuals.

The minister introduced several expenditure saving measures including halving the early childcare supplement to €500. Child benefit will be means tested or taxed in the next budget at the end of the year. Social welfare rates remain largely unchanged; however the government announced it will not pay out the traditional Christmas bonus payment this year.

This section of thte website contains our budget summary on the taxation measures, which we hope you will find useful for a quick reference on the main changes.