News & Events
On 10 October 2023, Minister Micheal McGrath and Paschal Donohue presented Budget 2024 to Dáil Eireann.
Similar to Budget 2023, this budget has been designed to protect those most affected by inflation, and as a result this was primarily a cost-of-living budget.
There was also a look to the future as the Minister McGrath announced the introduction of two major funds. The Future Ireland Fund which will help to protect living standards and public services for current and future generations with the potential to grow to over €100 billion by 2035. €14 billion will be put into the Infrastructure, Climate and Nature fund by 2030 to allow sustained levels of investment in infrastructure in the event of economic downturns and to support climate and nature related projects.
The budget introduced tax cuts/reliefs and other measures to help curtail the effects of the current cost of living crisis. Minister McGrath has revised the forecasted inflation rate for 2023 to 5.25% and to 2.9% for 2024.
The headline 12.5% corporation tax rate is here to stay, which is essential to the employment market, however details on the 15% rate for large corporates will be included in the Finance Bill. The country is considered to be at full employment with a record high of over 2.6 million people at work.
The forecasted Tax Revenue for 2023 has been revised downwards to €88.3 billion this year due to a reduction in summer 2023. Growth in tax receipts in 2023 was down compared with recent years and this is expected to be the case for 2024 also. The minister is projecting a General Government Surplus of €8.8 billion for 2023 and €8.4billion for 2024.
This budget introduced a personal income tax package to the value of €1.3 billion.
In response to the above, the budget introduced and/or extended numerous reliefs and measures to assist those most affected by the rising cost of living.
Information on some of the changes introduced are detailed below.
Personal Taxes
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Rate Band Increases
The standard rate band will increase from €40,000 to €42,000 for single individuals and from €49,000 to €51,000 for married couples/civil partners.
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Tax Credit Increases
An addition of €100 has been added to the following Income Tax Credits:
- Personal Tax Credit to €1,875.
- Employee Tax Credit to €1,875.
- Earned Income Tax Credit to €1,875.
- Home Carer Tax Credit to €1,800.
- Single Person Child Carer Tax Credit to €1,750.
- The Incapacitated Child Tax Credit is set to see an increase of €200, resulting in a new total of €3,500.
- Sea-going naval personal tax credit increased to €1,500.
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Universal Social Charge (USC)
The increase in the ceiling for the 2% rate of USC from €22,920 to €25,760. Additionally, the reduction of the 4.5% rate of USC to 4.0%, will apply to income between €25,761 and €70,044.
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Rent Tax Credit
Rent Tax credit to be increased from €500 to €750 per year for renters.
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Temporary tax relief for Landlords
A temporary tax relief is introduced which will primarily benefit small landlords. Subject to certain conditions being met, rental income relief of €3,000 for the year 2024, €4,000 for 2025 and €5,000 for the years 2026 and 2027, will be disregarded at the standard rate. A landlord’s property must remain on the market until 2028 to avoid a full clawback.
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Mortgage interest relief
A one-year Mortgage Interest Tax Relief for homeowners with an outstanding mortgage balance on their primary dwelling house of between €80,000 and €500,000 as of 31 December 2022.
Relief will be available in respect of the increased interest paid on the mortgage in the calendar year 2023 as compared with the amount paid in 2022, at the standard rate of 20% income tax. The relief will be capped at €1,250 per property.
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Retirement Relief
From 1 January 2025, the higher level of relief, which applies on disposals to children and to others, will be available for disposals occurring from the age of 55 until the age of 70. Also from 1 January 2025, there will be a new limit of €10 million on the relief available for disposals to a child up until the age of 70.
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Accelerated Capital Allowances – Farm Safety Equipment
This scheme, which allows for accelerated capital allowances of 50% per annum for eligible equipment, is being extended to 31 December 2026.
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Farmer’s Flat Rate compensation
The flat-rate scheme compensates unregistered farmers this rate will decrease from the current 5.0% to 4.8% from1 January 2024.
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CAT
Foster Children included in the threshold B for inheritance and gifts.
Business Taxes
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Accelerated Capital Allowances on Energy Efficient Equipment
Scheme has been extended 31 December 2025.
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Benefit in kind – motor vehicles
-Benefit in kind (BIK) disregarded amount for certain motor vehicles is being extended at the current rate of €10,000 for another year.
-In order to encourage the use of electric vehicles for company car purposes, the tapering of the preferential BIK relief is temporarily being suspended. The Original Market Value reduction will remain at €35,00 for 2024 and 2025, followed by a reduction to €20,000 in 2026 and €10,000 in 2027.
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OECD – Pillar Two
Details of the Minimum effective tax rate of 15% for larger companies will be included in the Finance Bill.
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Research and Development Tax Credit
The Research and Development (R&D) Tax Credit is increasing from 25% to 30%. This will maintain the net value of the existing credit for those businesses subject to the new 15% minimum effective tax rate, while also delivering a real increase in the credit to those smaller companies who will not be in scope of Pillar Two.
The first-year payment threshold is doubled from €25,000 to €50,000, to provide valuable cash-flow support to companies engaged in smaller R&D projects.
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Capital Gains Tax Angel Investor Relief
A new capital gains tax relief is targeted for angel investors in innovative start-up SMEs. This aims to assist SMEs in attracting investment, and make Ireland a more attractive location for angel investment. It will allow angel investors to benefit from a reduced rate of CGT of 16% (or 18% if through a partnership) when they dispose of a qualifying investment, for gains up to twice the value of their investment. Full details will be available in the Finance Bill.
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The Employment Investment Incentive scheme (EII)
EII provides SMEs and start-ups with an alternative source of funding. These changes have been made to the scheme: standardising the investment period to four years for all investments, and doubling the amount an investor can claim relief on for four year investments to €500,000.
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Section 481 Film Relief
There is an increase in the current project cap on qualifying expenditure in the Section 481 Film Tax Credit from €70 million to €125 million.
Indirect and Other Taxes Measures
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VAT
-The 9% VAT rate for gas and electricity extended for a further 12 months.
-The 0% VAT rate is extended to audiobooks and eBooks.
-The 0% VAT rate on the supply and installation of solar panels for private dwellings has been extended to the installation for schools with effect from 1 January 2024.
-The existing VAT registration thresholds increased for businesses from €37,500 for services and €75,000 for goods to €40,000 for services and €80,000 for goods respectively.
-The funds available under the Charity VAT Compensation Scheme are increased from €5m to €10m. This will mean Charities will get back more of the VAT that they pay on purchases.
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Vacant House Tax
The Vacant House Tax has been increased to 5 times the property’s current LPT liability in respect of properties that are occupied for less than 30 days per year. Increase takes affect from the next chargeable period commencing on 1 November 2023
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Help to buy
-The Help to Buy Scheme is being amended to include units purchased under the Local Authority Affordable Purchase Scheme.
-Extended to 31 December 2025.
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Excise
-Increase of 75 Cents on pack of 20 cigarettes, with a pro-rata increase on other tobacco products.
-the final tranche of fuel excise increases which were due to happen on 31 October have been deferred. The outstanding amounts restored of 8c on petrol, 6c on diesel and 3.4c on Marked Gas Oil in two equal instalments on 1 April 2024 and 1 August 2024.
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Climate and Nature Fund
-The Infrastructure, Climate and Nature Fund will have a climate and nature component worth over €3 billion, the aim of which is to help the achievement of carbon budgets through capital projects where it is clear our climate targets are not being reached.
-The accelerated capital allowances scheme for energy efficient equipment extended for a further two years.
-The tax disregard is doubled in respect of personal income received by households who sell residual electricity from micro-generation back to the national grid. From 1 January 2024, an income disregard of up to €400 per year will apply to profits or gains arising to a qualifying person from the micro-generation of electricity. This will provide relief from income tax, USC and PRSI
-VRT relief for battery electric vehicles is extended for a further two years to the end of 2025. This relief applies to battery electric vehicles with a value of up to €50,000.
-The rate per tonne of carbon dioxide emitted for petrol and diesel will go up from €48.50 to €56.00 from 11 October as per the trajectory set out in the Finance Act 2020.
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Future Ireland Fund
-It is announced that 0.8 per cent of GDP annually will be invested into the Future Ireland Fund from 2024 to 2035.
-It is expected that with a funding level of 0.8 per cent of GDP annually, the Fund could potentially reach a total of €100 billion by 2035.
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Farmer Stamp duty relief Extensions
-Consanguinity relief will be extended for a period of 5 years to provide more certainty to farming families as they plan for the future.
-Stock relief for young trained farmers, relief for succession farm partnerships and young trained farmers stamp duty relief are being amended to increase the aggregate lifetime amount of relief available to a person under these reliefs from €70,000 to €100,000 from 1 January 2024.
-The maximum amount of enhanced stock relief for farmers who are partners in a Registered Farm Partnership will be increased from €15,000 to €20,000 in line with EU regulations.
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Motor insurers insolvency compensation fund
1 per cent reduction to the Motor Insurers Insolvency Compensation Fund levy benefitting up to 2.2 million policy holders on renewal from 1 January 2024.
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Charity, philanthropy, and sport
The threshold for tax relief is increased on the donation of heritage items from €6 million to €8 million.
Social Welfare Measures –
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Energy Bill assistance
Three payments of €150 each will be made towards every household’s electricity bill, with the first payment coming before the end of 2023, with the other two paid by April 2024.
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Once off social welfare payments
- €300 lump sum payment will be made to recipients of the Fuel Allowance in the last quarter of this year.
- Additional €200 will also be paid this year to recipients of the Living Alone Allowance.
- A payment of €400 will be made before Christmas to those who receive the Carer’s Support Grant, Disability Allowance, Blind Pension, Invalidity Pension and Domiciliary Care Allowance.
- There will be a double payment of Child Benefit of €280 per child that will be paid before Christmas.
- €400 lump sum payment will be made to recipients of the Working Family Payment before the end of this year.
- There will be a reduction on student contribution fees of €1,000 available for fee free students. An increase in the Post Graduate Tuition fee contribution by €1,000 for student grant recipients.
- The Government is to increase the weekly rate paid to foster carers by €75 for children up to 12 years of age, and €73 for children over 12. A double payment of the Foster Care allowance will also be made this year.
- A double payment of Child Payment, worth an additional €140 for each child, will be made to all qualifying households before Christmas.
- For recipients of weekly Social Welfare, there will be a once off double payment to be paid in January. There will be a Christmas Bonus that will be paid in early December relating to Social Protection.
- The hot school meals programme will be expanded to a further 900 primary schools in April 2024.
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Social Welfare Increases
- Additional €12 increase for individuals in receipt of weekly social welfare payments.
- The Working Family Payment income threshold will increase by €54 per week.
- Qualified Child will increase by €4 to €46 per week for under 12s and to €54 per week for over 12s.
- Extension of the Child Benefit payment to 18 years old in full time education.
- Carer’s Allowance is no longer Means Tested and has now changed to €450 for a single person and €900 for a couple.
- Domiciliary Care Allowance has now increased by €10 per month.
- Parents Benefit will be extended to 9 weeks from August 2024