Below is a selection of Budget questions answered by Irish Times journalists Laura Slattery and Caroline Madden and PriceWaterhouseCoopers tax managers Seán Walsh and Eimear OLoughlin on irishtimes.com yesterday.
Question: Sarah from Ireland:
1. If you earn just over the income levy band, is it just that portion of your income that is over the band that is liable for the higher per cent levy?
2. Do car allowances or company car BIKs count in calculating what band you fall into?
Answer: The higher rate of the income levy applies to just that portion of your income that falls over the threshold, so you will pay the 4 per cent rate on income above the threshold of €75,036. Unless the benefit-in-kind is not regarded as income, for example a tax-exempt travel pass, it will count when calculating what band you fall into.
Most BIKs are classified as notional pay, so in effect what the employer does is calculate the taxable value of that on a monthly basis and adds it to the payroll. So it will then be subject to both PAYE and the income levy.
Question: Richard from Ireland:
For the purposes of income levy calculation are the bands doubled for a married couple both of whom are income earners?
Answer: The income levy thresholds apply to you and your wife individually and can’t be combined, even though you are jointly assessed for tax. So, for example, if your wife earns €50,000 and you earn €80,000, she will pay the levy at 2 per cent, while you will pay 2 per cent on income up to €75,036 and 4 per cent on the balance.
Question: Ruth from Ireland:
Please explain the health levy, does this affect me if I am with VHI etc or does it affect my wages?
Answer: The health levy is charged on your income and is not connected with any private health insurance policy you may have with VHI or other insurers. Up until yesterday, the rate of the health levy was 2 per cent. Now it is 4 per cent with a higher rate of 5 per cent for those who earn more than €75,036. The health levy does not apply to people earning less than €26,000 or €500 a week.
Question: Eamon from Ireland:
I re-mortgaged my house last year. I had an original mortgage in place with 10 years paid and following remortgage I have extended it to 15 years with increased payment. How many years, if any, of interest relief do I have now after yesterday’s Budget?
Answer: Mortgage interest relief has been abolished for people who are more than seven years into the life of their mortgage.
Up until today, you may have been in receipt of a mortgage interest tax relief monthly credit of up to a maximum of €75. That tax credit will now disappear. The tax credits for first-time buyers (those in the first seven years of their loan) remain in place for the time being.
Question: Kendra from Ireland: When will we know more about whether the child benefit will be either means tested and/or taxed and what the criteria will be?
Answer: In his speech yesterday, Mr Lenihan said that “the Government has decided that Child Benefit will be means tested or taxed in the Budget for next year”. We will probably have to wait until Budget 2010 to get clarification.
The full series of questions and answers is available at irishtimes.com/budget/