High Income Couple

Martin and Karen are in their mid to late-50s and live in Dublin suburbs.

Martin is a finance director who changed job last year and now has an annual salary of €155,000. Martin had the use of a fully expensed company car worth €28,000. His annual business mileage is less than 5,000 per annum. Martin was not part of the pension scheme in his previous job so he currently maximises his personal pension contributions to the 35 per cent limit on which tax relief is available. Karen does not work outside the home.

Karen’s elderly mother lives in a nursing home. Martin and Karen pay €21,000 towards the cost of this, of which €18,000 qualifies for tax relief. They claim the dependant relative tax credit and the qualifying medical expenses for the nursing home. They are relieved that the tax relief they can receive on this expense remains at the top rate of tax. The increase in the levy rate for income more than €100,100 per annum will affect Martin, but due to the level of AVC payments, the impact is minimal. Martin and Karen are delighted the Minister had cut the top tax rate to 41 per cent in addition to increasing the personal tax credit and the standard-rate tax band for married couples where just one spouse works.

On the whole the Budget changes give them an additional €109 per month.