Thursday, 20 June 2019

Questions (68)

Pearse Doherty

Question:

68. Deputy Pearse Doherty asked the Minister for Finance the tax reliefs or schemes that are due to end in the next 12 months; the annual cost of the relief or scheme in tabular form; and if he will make a statement on the matter. [25936/19]

View answer

Written answers (Question to Finance)

I can advise the Deputy that there are four tax reliefs that are scheduled to terminate within the next 12 months. Whether a relief or scheme is to be extended will be considered as part of the deliberative process in relation to Budget 2020. The four reliefs are a capital allowance scheme, known as the Living City Initiative, a farm restructuring scheme allowing relief from capital gains tax, a Vehicle Registration Tax (VRT) refund scheme for hybrid electrical vehicles and the Help to Buy scheme for first time owners of residential property.

The Living City Initiative, a scheme of property tax incentives that was enacted in Finance Act 2013 and commenced on 5th May 2015, is due to terminate on 4th May 2020. The scheme provides tax relief for qualifying expenditure incurred on the refurbishment and conversion of both residential and commercial buildings and is aimed at the regeneration of certain areas in the historic centres of Cork, Dublin, Galway, Kilkenny, Limerick and Waterford. There are three types of relief available; owner occupier residential relief, rented residential (landlord) relief and commercial or retail relief. The rented residential relief was introduced with effect from 1 January 2017. Owner occupier relief is given by writing off expenditure incurred at a rate of 10% per annum over ten years. Rented residential and commercial/retail relief is given by way of capital allowances (expenditure incurred is written off over a 7 year period at a rate of 15% per annum over 6 years and 10% in the final year).

The most recent statistics available for this scheme are as follows:

2016Amount claimed €M

2016Minimum tax cost assumed @ 40% for IT and 12.5% for CT €M

2016Number of claimants

0.5

0.2

15

Section 604B of the Taxes Consolidation Act 1997 provides relief from capital gains tax for farm restructuring by individuals where the sale, purchase or exchange of agricultural land takes place on or before 31 December 2019. To qualify for relief under that section, Teagasc must certify that the sale and purchase or the exchange of the land is carried out for farm restructuring purposes.

Information in relation to this relief was only first included in the tax returns for 2018 and therefore there is no current information available from Revenue sources as to the cost of this relief.

Finance Act 1992 provides for a remission or repayment of Vehicle Registration Tax on both series production hybrid and plug-in hybrid electric vehicles up to a maximum of €1,500 in the case of hybrid electrical vehicles and €2,500 in the case of plug-in hybrid electrical vehicles. These reliefs are due to expire on 31 December 2019.

I am informed by Revenue that the annual cost of providing a remission or a repayment of Vehicle Registration Tax for plugin hybrids and hybrid electric vehicles for 2018 and to 31 May 2019 is provided in the following table.

Year

€ Costs Millions

2018

€22.5

2019 (End of May 2019)*

€17.7

The Help to Buy (HTB) Scheme was introduced with effect from 1 January 2017 and is due to end in December 2019. It was introduced to assist first-time purchasers with the deposit required to buy or build a new house or apartment. The incentive gives a refund of Income Tax and Deposit Interest Retention Tax (DIRT) paid over the previous four years, subject to certain limits applying, as set out in the legislation.

It is open to HTB claimants to select any or all of the previous 4 tax years for the purposes of calculating the HTB refund. The maximum refund is calculated at the lowest of:-

(1) €20,000,

(2) income tax and DIRT paid in the previous 4 years, or

(3) 5% of the purchase price, or valuation in the case of a self-build, up to a maximum of €500,000 (a €600,000 maximum applied where, in the period from 19 July 2016 to 31 December 2016, a contract for the purchase of a new house was entered into, or in the case of a self-build, the first tranche of a qualifying loan was drawn down by the claimant).

The HTB scheme provides for the registration of building contractors with Revenue for participation in the scheme and for clawback of tax relief given in certain circumstances. The scheme applies where, in the period from 19 July 2016 to 31 December 2019, an individual enters into a contract with a qualifying contractor for the purchase of a qualifying residence or has drawn down the first tranche of a qualifying loan in respect of the individual’s self-build qualifying residence.

Revenue has provided me with the following information in relation to the annual cost of this scheme.

2018Number of claims

2018Tax cost €m

4,957

73.1