Written answers
Tuesday, 19 July 2016
Department of Finance
Tax Code
Niall Collins (Limerick County, Fianna Fail)
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147. To ask the Minister for Finance the action he will take to ensure Ireland is a more attractive location to establish a business than the United Kingdom with respect to capital gains tax, share options and personal income tax rates with regard to Irish business competitiveness levels; and if he will make a statement on the matter. [21998/16]
Niall Collins (Limerick County, Fianna Fail)
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162. To ask the Minister for Finance if he will provide a comparison between Irish and United Kingdom tax rates in capital gains tax, entrepreneurs capital gains tax, share options and personal income tax rates, in tabular form; and if he will make a statement on the matter. [21997/16]
Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 147 and 162 together.
I am advised by Revenue that the information requested by the Deputy as regards the comparison between Irish and United Kingdom (UK) Capital Gains Tax (CGT) rates and CGT for entrepreneurs in Ireland and the UK is set out in Tables 1 and 2 respectively and personal income tax rates for the year 2016 in Ireland and the UK are set out in Tables 3 and 4 respectively.
The taxation of share options in Ireland and the UK can depend on a number of factors such as the nature of the share option scheme, the size of the company, the option price of the shares on grant and the length of the option. As such, direct comparison of the taxation of share options in different jurisdictions is not possible. The Deputy may be aware that the Department is currently conducting a review of the tax treatment of share-based remuneration, which included a public consultation seeking input from interested parties.
Table 1
| CGT rates in Ireland | CGT rates in the UK |
|---|---|
| 33% rate applies generally. However, a rate of 40% applies to certain foreign life assurance policies and foreign investment products. Rates of 12.5% and 15% apply to certain venture capital fund managers. | 10% or 20%, depending on the individual's tax band except for second homes where rates are 18% or 28%, depending on the individual's tax band. (The rates were 18% or 28% up to 5 April 2016, depending on the individual's tax band.) |
Table 2
| CGT for entrepreneurs in Ireland | CGT for entrepreneurs in the UK |
|---|---|
| 20% rate applies to gains on qualifying assets up to a lifetime limit of €1m. Qualifying assets must have been owned for a continuous period of 3 years in the 5-year period prior to disposal. | 10% rate applies to gains on qualifying assets up to a lifetime limit of £10m. Qualifying assets must have been owned for a minimum period of 1 year prior to disposal. |
| Where the qualifying assets are shares in a company, individual must own 5% of the ordinary shares in the company. | Where the qualifying assets are shares in a company, individual must own 5% of the ordinary shares in the company. |
Table 3
| Ireland 2016 | Taxable Income | Tax Rate [1] |
|---|---|---|
| Single, Widowed or a Surviving Civil Partner without qualifying children | Up to €33,800 Balance | 20% 40% |
| Single, Widowed or a Surviving Civil Partner qualifying for Single Person Child Carer Credit | Up to €37,800 Balance | 20% 40% |
| Married or in a Civil Partnership - (one Spouse or Civil Partner with income) | Up to €42,800 Balance | 20% 40% |
| Married or in a Civil Partnership - (both Spouses or Civil Partners with income) | Up to €42,800 (with an increase of €24,800 max) Balance | 20% 40% |
Table 4
| UK 2016 | Taxable Income | Tax Rate |
|---|---|---|
| Personal Allowance | Up to £11,000 | 0% |
| Basic Rate | £11,001 to £43,000 | 20% |
| Higher Rate | £43,001 to £150,000 | 40% |
| Additional Rate | over £150,000 | 45% |
All taxes are reviewed as part of the annual Budget and Finance Bill process. Changes to tax policy are generally announced in the Budget in October each year and to the extent that changes, if any, in the areas of tax specified in the question are to be made, these will be made known in the forthcoming Budget.
[1] In addition to income tax, the Universal Social Charge (USC) applies to income from 2016 as follows: At 1% on income up to €12,012, 3% on income from €12,012 to €18,668, 5.5% on income from €18,668 to €70,044, 8% on income above €70,044. A rate of 11% applies to non-PAYE income above €100,000. The threshold at which total income is exempt from USC is €13,000.
Denise Mitchell (Dublin Bay North, Sinn Fein)
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148. To ask the Minister for Finance if he met with the IDA and discussed its recommendation to cut income tax rates; and if he will make a statement on the matter. [22025/16]
Michael Noonan (Limerick City, Fine Gael)
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As the Deputy will be aware, the IDA is a body under the aegis of the Department of Jobs, Enterprise and Innovation. I have recently received that Department's pre-Budget submission. Bi-lateral meetings between officials from my Department and the Department of Jobs, Enterprise and Innovation have already taken place to discuss the submission in further detail.
The Programme for Government contains a commitment to seek the approval of the Oireachtas for the continued phasing out of the USC as part of a medium term income tax reform plan. Such a plan, if approved by the Oireachtas would effectively reduce the income tax burden on individuals, which is a central tenet of the pre-Budget submission made by the Department of Jobs, Enterprise and Innovation.
As the Deputy will be aware, it is a long standing practice of Finance Ministers not to comment on any tax proposals that may be the subject of forthcoming Budget decisions.
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