Welcome to our monthly newsletter, TOPICS.
This month it includes the following Topics:-
- Local Property Tax (changes in 2019)
- Limited Company OR Sole Trader
- Fair Deal Scheme (Nursing Home Care)
Local Property Tax (changes in 2019)
- Local Property Tax (LPT) was introduced in 2013.
- The initial valuation date for each liable property was 1st May 2013 which was the basis for LPT tax liability 2013 to 2019 inclusive subject to any reductions by the relevant local authority from 2015.
- A new valuation date is been introduced as at 1st November 2019 and will form the basis for LPT tax 2020 to 2027 inclusive.
- It is yet to be announced if the current rate bands will apply to valuations from 1st November 2019.
Limited Company OR Sole Trader
Due to the general uplift in the economy more SME’s are considering if they should incorporate their business. The following are some PROS and CONS which should be considered before starting or transferring your business to a limited company:-
- Pay Taxes only on the personal salary / funds withdrawn from the business (any profits not withdrawn are subject to corporation tax 12.5% for trading companies)
- Scope to contribute higher percentage of salary to company executive pension scheme paid by the company without any tax implications for the director.
- Limited restricted liability from creditors subject to certain conditions
- Preparation of more detailed annual Full and Abridged accounts
- Additional legal responsibilities in terms of directors and company secretary responsibilities
- Additional filing responsibilities in terms of filing Abridged Accounts with Companies Registrations Office (CRO)
- Disclosure of company’s balance sheet & directors salaries at CRO depending on size of company.
- Additional professional fees in relation to additional compliance filing requirements:-
Fair Deal scheme (Nursing Home care)
While it may not be a subject a lot of us need to consider, it is a reality of life that at some stage you or your partner may have to face the cost of full time nursing home care.
The fair deal scheme was introduced in 2009 and is administrated by the HSE. The scheme is aimed by providing State support to assist with funding to meet the (high) cost of Nursing Home care.
The main points of the Fair Deal Scheme are as follows:-
- An application is subject to a CARE needs assessment and a financial assessment.
- The more assets you have the more you will pay towards the cost of care
- Any assets sold / transferred within 5 years prior to an application for State support will be included as part of the financial assessment. (NB planning)
- All Income and assets (property / cash assets) are included in the financial assessment.
- While the State will pay towards the cost of care, subject to a list of approved nursing homes and agreed maximum fees agreed with the homes, you will also have to make a contribution.
The contribution you must pay is based on the following:-
- 80% (40% if you are part of a couple) of your income less certain deductions (income tax, health expenses, mortgage interest, LPT tax etc). The first €72,000 pa (€36,000 pa if you are part of a couple) is disregarded.
- 7.5% (3.75% if you are part of a couple) of all assets.
- The amount you must contribute in respect of the valuation of family home is only taken into account for the first 3 years.
- You may only apply for a re-assessment every 12 months. However the HSE may re-assess your income / assets / your contribution at anytime.
- An optional application for a Nursing Home loan may be made to the HSE to fund the element of the contribution applicable to the family home and / or other properties.
- The initial loan is not subject to interest charges but is subject to any inflation.
- The loan is repayable within 12 months of the death of the person in care but a partner / spouse may apply for a deferral until their death if they continue to live in the property. Where the loan is not repaid within the specific period, it is subject to interest.
- Click on the link below for more details: