Budget 2014: Main Measures

By Eoin Fahy, Monday, 14th October 2013 | 0 comments

See below for a list of the principal measures in the Budget, or click here for a commentary on the overall Budget.

Overall Budgetary Position:

  • The main domestic measure of the budget deficit, the Exchequer Borrowing Requirement, will be 4.8% of GDP in 2014, down from an estimated 7.3% this year. If no austerity measures were introduced in the Budget, the deficit would have been 5.8% of GDP next year.
  • GDP is expected to grow by 0.2% this year, and 2% next year.  This is higher than the previous forecast of 1.8% (the figure endorsed by the independent Fiscal Advisory Council) due, the government says, to the measures in this budget which will increase growth next year.
  • The debt to GDP ratio will be 124% at the end of this year, but will fall to 120% by end 2014, 118.4% in 2015, and 114.6% by 2016.


  • The main income tax rates, band and credits are unchanged.
  • The pension  levy of 0.6% which was due to expire at the end of next yearwill first rise to 0.75% for 2014 and then fall to 0.15% from 2015 onwards.
  • Tax relief on pensions is being restricted. The standard fund threshold will be cut from €2.3m to €2m from the end of this year.  The current multiplier for converting a DB pension entitlement into an equivalent fund for the purposes of the cap is currently a flat 20 times, this is being replaced by a range of multipliers that will vary with age.
  • Changes will be made to ensure that no Irish companies can be "stateless" for tax purposes - this is a move clearly aimed to restricting the ability of companies to avoid tax both in Ireland and in other countries.  This has been a controversial issue in recent months for certain large multinational companies.
  • A "rollover" relief will be put in place for Capital Gains Tax for investors who invest proceeds of sales into new investments in certain productive businesses
  • Some investments in small companies will be exempted from the higher earners  cap on reliefs - basically giving the same tax advantages for high earners as are in place for middle income taxpayers who make this type of investment.
  • Tax relief on medical insurance is being restricted, with a cap so that the more expensive plans do not benefit from full tax relief. Tax relief will not apply on amounts greater than €1000 per adult and €500 per child.
  • Excise duty on cigarettes is up 10c
  • Excise duty on wine is up 50c per bottle
  • Excise duty on petrol and diesel is unchanged
  • Excise duty on a pint of beer or standard measure of spirits is up 10c
  • The DIRT tax rate is to rise from 33% to 41%, and the same rate will be applied to the exit tax on life insurance policies.
  • The VAT rate on tourism and hospitality related services, which was due to rise back to 15.5% from 9%, will remain at 9%.  In addition, the air travel tax will be abolished from April 2014.
  • An independent cost/benefit analysis will be carried out on the agribusiness sector to see which tax reliefs work and which don't.  Its recommendations will be considered in Budget 2015. 
  • In the construction sector, a new home renovation incentive scheme will provide a 13.5% tax credit for people carrying out work on their principal residence, for expenditure over €5000 and below €30,000.  In part, this is designed to squeeze the black economy as obviously the tax relief will only be available where a tax compliant builder is used.
  • An exemption from CGT for those who buy property and hold it for seven years is being extended to end 2014 (it was due to expire at the end of this year).
  • A new bank levy will raise €150m, levied in the same way as that levied from 2002 to 2005, i.e. essentially based on deposits. But the restriction on deferred tax assets for NAMA loses is being abolished.
  • A package of 25 measures, costing €500m in total, is designed to help business and create jobs, in particular in the SME sector will be introduced, including measures such as increasing the cash payments basis VAT threshold, a two-year tax holiday for long-term unemployed who set up a new business, and various other measures.
  • "Top slicing relief" on redundancy payments is being abolished.  This was a benefit which provided that people made redundant paid tax on the lump sum at their average rate of tax in the previous years, rather than their marginal rate.


  • Total spending cuts of €1.6bn out of total budgetary measures of €2.5bn.
  • Sick pay for employees will not apply to the first six days of absence.
  • The rate of unemployment benefit will be cut for claimants under 25
  • Other basic rates of social welfare will remain unchanged.
  • Medical card thresholds for the over 70s will be cut, reducing the number of pensioners entitled to a medical card by about 10%. On the other hand, free GP care will be introduced for all children under 5 years of age.
  • The telephone allowance for pensioners will be scrapped. 
  • The "death benefit" of €850 for next of kin to pay funeral expenses etc has been abolished.
  • Maternity benefit will be standardised at €230 per week, a slight reduction for better paid new claimants. 
  • Medical card prescription charge is up to €2.50 (from €1.50), with a monthly cap of €25.

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