How the Budget impacts your pocket
13 October 2017
How the Budget impacts your pocket
There were no major surprises in the Budget as it had been well leaked in advance. Overall Budget 2018 will not have a significant impact on take home pay. There have been very few income tax changes and the effect of the changes announced will be minor.
The strong focus on expenditure in the budget package will see a significant increase in spending; with health, housing and education being the key target areas for expenditure increases.
The State Pension and all other Social Protection weekly payments are increasing by €5 per week and the Christmas bonus payment of 85% will again be paid to all Social Welfare recipients in 2017.
Other welfare increases include One Parent Family Payment and the Jobseekers’ Transitional Scheme rising by €20 per week. The threshold for receipt of the Family Income Supplement rises by €10 per week for families with up to three children and the weekly rate of the qualified child payment is going up by €2 per week. There will be a Telephone Support Allowance of €2.50 per week for those in receipt of both the Living Alone Allowance and the Fuel Allowance.
Prescription charges are to be reduced for everyone with a medical card under the age of 70 from €2.50 to €2 per item and the monthly cap for prescription charges decreased from €25 to €20. The threshold for the Drugs Payment Scheme falls from €144 to €134.
For the second time in a row, the minimum wage is set to increase. It will be increasing from €9.25 to €9.55 from January 2018.
Self-Employed will receive a €200 increase in the Earned Income Credit, bringing it to €1,150 in 2018.
The point at which the higher 40% rate for Income Tax kicks in will rise by €750 to €34,550. This means an extra €150 a year after tax for those who earn enough to benefit.
There have been cuts to two rates of USC, with the changes worth an average of €250.
The home carers’ tax credit will increase by €100 to €1,200 per year.
The impact of the Budget will depend on your own circumstances:
1.A single PAYE worker with no dependents who does not own their own home and earns €35,000 will take home €240 more per year in their pay as a result of the tax changes.
2.A married couple where one person is self-employed and earns €45,000 and the other person does not work will come out with €315 more per year, due to the increase in the self-employed tax credit.
3.A single PAYE worker with one child earning €25,000 will take home €65 more per year.
An Independent Financial Advisor will be able to give you further information specific to your own circumstances.
Jacinta Clerkin, QFA is a Qualified Financial Advisor. You can contact her through John F. Loughrey Financial Services by telephone on 074-9124002 or by email on jacinta@jfl.ie
