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I realise a lot of parents are worried how the 2013 Budget will affect them. The following article will explain how the main changes announced in the Budget will impact families of Special Needs Children:

Respite Care Grant

All families will see a reduction in this grant from €1,700 to €1,375 per year. Domiciliary Care Allowances, Carers Benefit and Allowance remain the same for 2013.

Household Package

There are no changes to the Fuel Allowance, Free Travel and Free TV Licence schemes. However, the Telephone Allowance will be reduced to €9.50 per month.  The Electricity/Gas Allowance will be set at a single rate of €35 per month – it was previously set at 150 units a month.  Previously when prices rose the allowance rose, now it is fixed.

Property Tax

A Local Property Tax is to be introduced from 1 July 2013 and will be administered by the Revenue Commissioners who don’t mess around!  The tax will be charged at 0.18% of the market value of your property up to €1million.

Property Tax Calculator

House Value : From House Value: To Property Tax  

€0

€99,999

€90

€100,000

€149,999

€225

€150,000

€199,999

€315

€200,000

€249,999

€405

€250,000

€299,999

€495

€300,000

€349,999

€585

€350,000

€399,999

€675

€400,000

€449,999

€765

€450,000

€499,999

€855

€500,000

€549,999

€945

A rate of 0.25% will apply to any excess value over €1 million but you don’t have to worry about that. It is unlikely that during our lifetime we will ever see our property value rise above €1 million! This will bring an end to the shambled Household Charge.

Tax

No increases to income tax credits, rates or bands. But before you smile, you will be paying more on PRSI because there is now an annual minimum contribution for the self-employed of €500 and employees will now pay PRSI on all their income (previously the first €127 was exempt).  Unearned income including rental, investment, dividends and deposit income will be subject to PRSI for PAYE employees from 1 January 2014. 

Medical Charges

Medical card holders will see a rise in the cost of their prescription charge, from €0.50 to €1.50 up to a monthly limit of €19.50 per family. Parent using the drug payment scheme will now have to pay €144per month.

Child Benefit

Child Benefit will be reduced by €10 to €130 per month and this rate will now apply to the first, second and third child. Budget 2012 also introduced a flat rate of €140 per month for your fourth and subsequent children. If you are planning to have more children, any maternity benefit you receive will now be taxed.

Clothing and Footwear Allowance

The Back to School Clothing and Footwear Allowance will reduce by €50 per child. From €250 to €200 for children aged 12-17 or aged 18-22 in full-time education and from €150 to €100 for children aged 4-11 years.

Third level Education

The student contribution will increase by €250 per annum for the academic years 2013/2014, 2014/2015 and 2015/2016. The income thresholds for entitlement to the student grant are also been reduced by 3% for people qualifying in 2013.

Savings & Investments

PRSI to be introduced on investment and deposit interest. This basically amounts to a new tax and will reduce any returns you potential make from your savings and investments.

Exit Tax will increase by 3% on any saving (33%) or investment (36%) products you may have. In simple terms you are going to make little to no return you’re your standard financial saving and investment products offered by Banks, Financial Advisor and/or Brokers. Don’t worry, I have a solution. The reason most people don’t know about these products is because Advisor don’t receive any commission when recommend them.

Inheritance Tax rate increased to 33% and parent/child threshold reduced to €225,000. This again means your children will receive less of your estate when you do pass it on to them. It might seem an insignificant change but when you are trying to pass as much money on to your special child, its impact will then be severely felt.

Pension

The good news first which is the current pension levy which is deducting 0.6% from your current pension pot will be abolished in 2014. You can still contribute towards your pension and receive tax relief at your marginal rate (20/41%).

Access your AVC

A scheme is being introduced to allow employees with Additional Volunteer Contribution (AVCs) to make a ‘once off’ withdrawal of up to 30% without having to retire. It has not been extended to any other type of individual or pension product. If you do avail of this scheme, your withdrawal will be subject to ‘marginal rate’ tax. This is only suitable to distressed parents who desperate need some cash and are willing to pay a penalty for it.

Usual Suspects

Beer, wine, cigarettes, motor tax and Vehicle Registration Tax will all be increased. However petrol and diesel cost remains unchanged.

Summarise

As with all budgets, it will reduce your disposable income. I recommend you revisit your Special Needs Financial Plan and keep your focus on achieving your financial goals for 2013. If you have not booked an appointment with me please do so as I will be able to offer you a private and personal solution to your finances and personal advice on how to make the 2013 Budget work for you, your family and your child with special needs.

If you have any questions feel free to call me on 086 335 3013 and I look forward in helping you build a brighter financial future in 2013.

Allan M.Cuthbert QFA

Founder & Owner