The power of positive thought is a not to be underestimated, so instead of dwelling on the harshness of the budget and getting bogged down in the doom and gloom of our economic frailties, we would like to draw your attention to some of the positive developments that may provide you with opportunities in the year ahead. As any good entrepreneur knows to be successful you must stay positive, keep sight of your goals, take any opportunity you can and overcome the obstacles that hold others back.

“Action is a great restorer and builder of confidence. Inaction is not only the result, but the cause, of fear. Perhaps the action you take will be successful; perhaps different action or adjustments will have to follow. But any action is better than no action at all.” – Dr. Norman Vincent Peale (Author of “The Power of Positive Thinking”)

New Company Tax Exemption
The three year tax exemption for new companies has been extended. If you’re starting a new venture and meet the criteria you could operate for 3 years without paying and corporation tax. This provides an excellent opportunity to roll up funds in a tax-free environment.

Research & Development
The Irish R&D credit system is one of the most favourable in the world. Following the budget, the first €100,000 of qualifying R&D expenditure will benefit from the 25% tax credit on a volume basis. There is also increased availability for the credit where a company outsources some of their R&D. Finally, the R&D credit may now be used to reward key employees involved in the R&D process. For full details of the R&D credit look out for our blog on this subject which will be published in the near future.

Stamp Duty
Stamp Duty is a tax on transactions. The rate for non-residential property has fallen from 6% to 2%, representing a drop in tax rate of 67%. This makes the cost of transactions much more attractive. For example buying a warehouse for €1.5m would have cost €90k in stamp duty before the budget, but now the cost is just €30k.

Mortgage Interest
Mortgage Interest relief for the “negative equity generation” of purchases who bought in 2004-2008 has been increased to 30% for first time buyers and 15% for non-first time buyers.

Mortgage interest relief continues to apply to purchasers up to 31st December 2012. With the depressed property market and the availability of mortgage interest relief 2012 could be a good year to get on the property ladder for those in a position to do so.

The relief will be granted until 2017.

It could’ve been worse!
A number of potential changes were flagged up pre-budget, including

  • reducing relief on pension contributions to the standard rate
  • increasing income tax rates / reducing tax bands / reducing tax credits
  • complete removal of legacy property reliefs
  • removal of capital gains tax reliefs such as retirement relief

Although there were negative moves in the areas of pensions, property reliefs and capital reliefs, it could have been a lot worse. It is important to recognise what reliefs are still available and plan around them. With harsh budgets predicted for the next 4 years as the country gets its finances back in order we have a window of opportunity to utilise the benefits that are still around.