TAX FOCUS BUDGET 2024
BALANCING IMMEDIATE AND LONG-TERM NEEDS Ministers Michael McGrath and Paschal Donohoe presented Budget 2024 on Tuesday 10 October 2023 as one which seeks to balance immediate cost-of-living and social needs with longer-term requirements for society. The Budget contains a series of tax measures and additional expenditure to help families and businesses deal with rising costs. In additional it created two new funds to address the needs of an ageing society as well as longer-term infrastructure and climate requirements. In this summary report the tax team at DHKN reports the key points set out in the Budget by both ministers as they impact taxation and welfare payments. Personal Taxation
Page 2
Indirect Taxes
Page 9
Property
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Climate Change Taxes
Page 10
Business Matters
Page 5
Other Tax Measures
Page 10
Agricultural Reliefs
Page 7
Capital Taxes
Page 8
Expenditure Welfare & Page 11 Benefits
TAXATION MEASURES 1. PERSONAL TAXATION Tax Bands & Tax Credits There is an increase of €2,000 in the income tax standard rate band cut-off point for all earners in 2023. The increases are as follows:
Single, widowed or surviving civil partner from €40,000 to €42,000;
Single, widowed or surviving civil partners, qualifying for the Single Person Child Carer Credit from €44,000 to €46,000;
Married couples or civil partners (one income) from €49,000 to €51,000;
Married couples or civil partners (two incomes) from €49,000 to €51,000 (with an increase of €33,000 or the second income if lower)
The Personal Tax Credit will increase by €100 from €1,775 to €1,875. The Employee Tax Credit will increase by €100 from €1,775 to €1,875. The Earned Income Credit will increase by €100 from €1,775 to €1,875. An increase of €100 in the Home Carer Tax Credit from €1,700 to €1,800. The Sea-going Naval Personnel Tax Credit of €1,500 is extended to 31 December 2024.
Universal Social Charge The 2.0% band of USC increases by €2,840 to €25,760. The 4.5% rate is reduced to 4.0%. INCOME
RATE Aged under 70 years
Aged 70 years and over
No Medical With Card Medical Card
No Medical With Card Medical Card
€0 - €12,012
0.5%
0.5%
0.5%
0.5%
€12,013 - €25,760
2.0%
2.0%
2.0%
2.0%
€25,761 - €70,044
4.0%
2.0% / 4.0% *
2.0% / 4.0% *
2.0% / 4.0% *
€70,045+
8.0%
8.0%
8.0%
8.0%
Self-employed income over €100,000: 3% surcharge *The reduced rate of 2% USC that currently applies to full medical card holders, whose aggregate income does not exceed €60,000, will be extended for two years to the end of 2025.
Budget 2024 – Summary
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Rent Tax Credit The rent tax credit is being amended to increase the amount that can be claimed from €500 to €750. One credit may be claimed per person per year, and the credit will be doubled in the case of married couples and civil partners. As before, the credit will be available to renters who are not already availing of State housing supports. The proposal relates only to tenancies registered with the Residential Tenancies Board and licences for the use of a room in another person’s principal private residence. Eligibility for the credit will be extended to parents who pay for their student children’s rental accommodation in the case of Rent a Room accommodation or “digs”. This change will also apply retrospectively to the years 2022 and 2023.
Mortgage Interest Tax Relief In light of the current high interest rate environment, a temporary one-year mortgage interest tax relief is being introduced. The relief will be available to taxpayers in respect of their mortgage on their principal private residence in the State where:
the outstanding mortgage balance was between €80,000 and €500,000 on 31 December 2022, and
the taxpayer is compliant with Local Property Tax (LPT) requirements.
Mortgage interest tax relief will be available at the standard rate of income tax (20%) in respect of the increase in the interest paid between the calendar year 2022 compared to the calendar year 2023. The maximum value of the relief is €1,250 per property. To claim the mortgage interest tax relief, the taxpayer must file a tax return with Revenue. The relief will operate by way of a credit offset against the taxpayer’s income tax liability in 2023. It is anticipated that the relief may be claimed in early 2024. Further detail will be set out in the Finance Bill.
Micro-generation of electricity Micro-generation of electricity is the small-scale production of electricity by consumers who generate electricity at their own homes for their own consumption and sell the excess electricity produced. There will be an increase from €200 to €400 in the exemption from income tax, USC and PRSI for certain profits arising to a qualifying individual who generates energy from renewable, sustainable or alternative energy sources for their own consumption. The exempted profits are those arising from the domestic generation of electricity which is supplied to the grid.
Information campaign Revenue estimates that €180 million in refunds could potentially be due to taxpayers for 2022 alone. An extensive public information campaign will be launched by Revenue to raise awareness of the range of tax credits and reliefs available to PAYE taxpayers, to ensure they can avail of their full entitlements and receive any refunds that are due.
National Minimum Wage As of 1 January 2024, the national minimum wage will increase by €1.40 per hour to €12.70 per hour.
Budget 2024 – Summary
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2. PROPERTY Help to Buy (HTB) The Help to Buy Scheme is being extended for a further year until 31 December 2025. The scheme is also being amended to reflect its interaction with the Local Authority Affordable Purchase Scheme (LAAP). This amendment will enable the use of the affordable dwelling contribution received through the LAAP scheme for the purposes of calculating the 70% loan-tovalue requirement, thereby facilitating access to all LAAP purchasers to the HTB scheme. This will come into effect from 11 October 2023.
Rented Residential Relief A new temporary tax relief for landlords is being introduced. Subject to certain conditions being met, rental income 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 full claw-back of the benefit of the relief applies in the event the landlord removes from the rental market, within 4 years, any of the rental properties held in year 1 when the benefit is claimed. There is no clawback after the expiry of the 4-year period. The relief relates only to tenancies registered with the Residential Tenancies Board, or where a landlord lets a residential property to a public authority (including a Local Authority). In the case of joint ownership of a property, the relief will be divided in proportion to the percentage of the rental income to which each owner is entitled. Further detail will be set out in the Finance Bill.
Vacant Homes Tax (VHT) The VHT was introduced in 2023 to increase the supply of homes for rent or purchase to meet demand for housing. The tax applies to residential properties which are unoccupied for twelve months or more. A property will be considered vacant for the purposes of the tax if it is occupied for less than 30 days in a 12-month period. The rate of the VHT is being increased from three times to five times a property’s existing base Local Property Tax liability. This increase will take effect from the next chargeable period, commencing 1 November 2023.
Residential Zoned Land Tax Budget 2022 announced a new Residential Zoned Land Tax to encourage the use of land for building homes. The Minister announced that the primary objective is to increase the supply of residential accommodation rather than to raise revenue. The tax is based on the market value of the land and will be applied at a 3% rate from the outset. Landowners will have an opportunity to apply to their Land Authority to have the zoning status of their land amended. Once the tax is introduced it will replace the vacant site levy. The liability date for the Residential Zoned Land Tax (RZLT) is being extended by one year to allow for the planned 2024 review of maps to take place and to afford affected landowners with a further opportunity to engage with the process
Budget 2024 – Summary
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3. BUSINESS MATTERS Corporation Tax Rates The current 12.5% Corporation Tax Rate remains unchanged. In the Finance Bill new provisions will be introduced to implement the 15% minimum effective tax rate for large companies, i.e., companies that are part of a group with turnover of €750 million and more per annum. The Minister also confirmed that a participation exemption regime for foreign sourced dividends would be introduced, with the provision to be included in next year’s Finance Bill.
PRSI PRSI contribution rates will increase by 0.1% from 1 October 2024.
Research and Development Tax (R&D) Credit The R&D tax credit provides a 25% tax credit for qualifying R&D expenditure. The rate is being increased from 25% to 30% in respect of 2024 expenditure, for which claims will be filed in 2025. Under the current system a company has the option to call for payment of their eligible R&D tax credit or to request for it to be offset against other tax liabilities. The first year payment threshold allows for a claim up to the threshold amount to be paid in full in the first year, rather than over three years. The current threshold of €25,000 is being increased to €50,000.
EIIS Employment Investment Incentive (EII) The EII provides income tax relief for risk capital investments in qualifying small and medium enterprises. From 1 January 2024, the minimum holding period required to obtain relief is being standardised to four years for all investments, and the limit on the amount that an investor can claim relief on for such investments is being increased to €500,000. Further changes will be made to the scheme to reflect amendments to the EU General Block Exemption Regulation and details will be set out in the Finance Bill.
BIK Measure: Original Market Value Deduction for Certain Categories of Vehicles The temporary universal relief of €10,000 applied to the Original Market Value of a vehicle (including vans) for vehicles in Category A-D and the amendment to the lower limit of the highest mileage band is being extended to 31 December 2024.
Budget 2024 – Summary
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BIK Measure: Relief for Battery Electric Vehicles The tapering mechanism applied to benefit in kind relief for electric vehicles is being enhanced by extending the current Original Market Value deduction of €35,000 until end 2025, followed by a reduction to €20,000 in 2026 and €10,000 in 2027. Taken together with the extension of the universal Original Market Value relief of €10,000, this measure will mean that an employee with an electric company vehicle will see an overall BIK Original Market Value relief of €45,000 in 2024.
Bank Levy A revised bank levy is being introduced for 2024. It will apply to those banks that received financial assistance from the State during the banking crisis, (AIB, EBS, Bank of Ireland and PTSB). It will have a revenue target of €200 million.
Section 481 Film Relief Film relief provides relief in the form of a corporation tax credit for the qualifying costs of certain audiovisual productions. The maximum qualifying expenditure in respect of which the 32% credit can currently be granted is capped at €70 million. This cap is being increased to €125 million.
Accelerated Capital Allowances – Energy Efficient Equipment The Accelerated Capital Allowances (ACA) scheme for Energy Efficient Equipment (EEE) provides a tax incentive for companies and unincorporated businesses who invest in highly-EEE. The scheme is being extended for a further two years to 31 December 2025.
Budget 2024 – Summary
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4. AGRICULTURAL RELIEFS Consanguinity (Stamp Duty) Relief This stamp duty relief is being extended to 31 December 2028. It reduces the rate of stamp duty applicable to intra-familial transfers of farmland from 7.5% to 1%.
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.
Young Trained Farmers and Succession Farm Partnerships 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.
Stock Relief (Registered Farm Partnerships) Stock relief for registered farm partnerships is being amended to increase the threshold from €15,000 to €20,000 in the case of qualifying periods commencing on or after 1 January 2024.
Land Leasing Income Tax Relief The Minister indicated that the Land Leasing Income Tax Relief will be amended so that it only becomes available when the land has been owned for seven years, so that it is targeted to active farmers. Currently there is no ownership period requirement.
Budget 2024 – Summary
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5. CAPITAL TAXES Capital Gains Tax (CGT)/Capital Acquisitions Tax (CAT) The current rates of 33% remain unchanged.
CAT Group Thresholds The Minister confirmed that Group B threshold would be extended to include Foster Children.
Retirement Relief Retirement Relief is a relief from CGT that arises on the disposal of certain business assets and shares in certain companies. To avail of the relief an individual has to have reached the age of 55 and satisfy various conditions. Under the current legislation once an individual has reached the age 66 there is a €3 million limit on the relief where the qualifying assets are transferred to the individual’s children or certain others. From 1 January 2025 this age limit condition for the transfer of chargeable assets to children and to others will increase from 66 to age 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.
Revised Entrepreneur Relief The Department of Finance is to examine opportunities to refocus this relief with a view to further improving the incentives for founders and entrepreneurs in the innovative start-up phase, and to ensure it is contributing to employment creation.
Angel Investor Relief This new relief is being introduced to encourage angel investment in innovative startups, in line with the recommendation from the Commission on Taxation and Welfare. The relief will be available to an individual who invests in an innovative start-up small and medium enterprise (SME) for a period of at least 3 years. The investment by the individual must be in the form of fully paid-up newly issued shares costing at least €10,000 and constituting between 5% and 49% of the ordinary issued share capital of the company. The scheme will include a certification process, which will be carried out by Enterprise Ireland, to ensure the relief is targeted at innovative SMEs that can demonstrate financial viability and compliance with the requirements of the EU General Block Exemption Regulation. Qualifying investors may avail of an effective reduced rate of CGT of 16%, or 18% if through a partnership, on a gain up to twice the value of their initial investment. There is a lifetime limit of €3 million on gains to which the reduced rate of CGT will apply. The full details of this new relief will be available when the Finance Bill is published.
Budget 2024 – Summary
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6. INDIRECT TAXES VAT Increase in VAT Registration Thresholds The existing VAT registration thresholds are being increased. From 1st January 2024 the VAT registration thresholds will be €40,000 for services and €80,000 for goods.
VAT scheme for unregistered farmers The flat-rate scheme compensates unregistered farmers on an overall basis for VAT incurred on their farming inputs. Based on macro-economic data received from the CSO and the Revenue Commissioners for the period 2021-2023, this rate will decrease from the current 5.0% to 4.8% from 1 January 2024.
VAT rate for gas and electricity The 9% VAT reduction for gas and electricity is being extended for an additional 12 months, until 31 October 2024.
Charities Compensation Scheme From 1 January 2024, the total annual capped fund for the Charities VAT Compensation Scheme is being increased up from €5 million, to €10 million.
VAT rate for audio books and ebooks From 1 January 2024, the VAT rate for audiobooks and e-books is being reduced from 9% to zero.
VAT rate on the supply and installation of solar panels in schools From 1 January 2024, the VAT rate for the supply and installation of solar panels installed in schools is being reduced to zero. Currently the 0% rate only applies to the supply and installation of solar panels on private dwellings.
EXCISE DUTIES Temporary Excise Rate Reduction The temporary excise rate reductions applying to auto diesel, petrol and marked gas oil which were due to expire on 31 October 2023 are being extended until 31 March 2024. Half of the outstanding amounts of 8 cents on petrol, 6 cents on diesel and 3.4 cents on Marked Gas Oil will be restored on 1 April 2024, with the balance restored on 1 August 2024.
Tobacco Products Tax The excise duty on a packet of 20 cigarettes is being increased by 75 cents (including VAT) with a pro-rata increase on the other tobacco products.
E-Cigarettes In light of public health interests, continuing delays to the revision of the Tobacco Products Tax Directive and the Programme for Government commitment to tax ecigarettes and vaping products. A domestic tax will be introduced on these products in next year’s Budget. Budget 2024 – Summary
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7. CLIMATE CHANGE TAXES Carbon Tax The rate per tonne of carbon dioxide emitted for petrol and diesel will increase from €48.50 to €56.00 from 11 October as per the trajectory set out in the Finance Act 2020. This increase will be applied to auto diesel and petrol with effect from 11 October 2023 and to all other fuels with effect from 1 May 2024.
VRT Relief for Battery Electric Vehicles The VRT relief for battery electric vehicles, which was due to end on 31 December 2023, is being extended by two years to 31 December 2025.
8. OTHER TAXATION MEASURES Increase Threshold for Donations of Heritage Items This tax relief is available to taxpayers who donate heritage items to Irish national collections. A credit equal to 80% of the market value of the item donated can be set against donors’ liabilities for income tax, corporation tax, capital gains tax or gift and inheritance tax. Currently, the aggregate value of items that can be donated under the scheme in any one year cannot exceed €6 million, this limit is to be increased to €8 million.
Defective Concrete Products Levy This levy is being amended so that it will no longer apply to the pouring concrete used in the manufacture of precast concrete products. A refund scheme is also being put in place to allow those who paid the levy on such concrete between 1 September 2023 and 31 December 2023 to reclaim it.
Revenue Compliance Revenue will conduct a range of targeted compliance management activities in 2024. It is expected that additional Exchequer receipts will arise from increased taxpayer compliance in the areas of eCommerce, payroll and expenses reporting and the cash/shadow economy.
Enhanced Employers’ Reporting A new Enhanced Reporting Requirements (ERR) process is being introduced by Revenue for 2024 and later years to capture details of some non-taxable payments made to employees and directors.
Simplification - business taxes Revenue will, in the coming weeks, establish a dedicated Tax Administration Liaison Committee (TALC) subgroup focused on identifying any opportunities to simplify and modernise the administration of business supports. Revenue will also shortly launch a Public Consultation on how we can use digital advances to modernise Ireland’s VAT Invoicing and Reporting System. In addition, the Department of Finance will launch a public consultation on share-based remuneration recognising the increasing importance that business places on sharebased remuneration in rewarding and retaining employees.
Budget 2024 – Summary
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9. EXPENDITURE WELFARE AND BENEFITS Once-off payments
Three credits of €150 each will be provided between the end of this year and April of next year to assist households with energy bills.
Double payment of Child Payment, worth an additional €140 for each child, will be made to all qualifying households before Christmas. A double payment of the Foster Care allowance will also be made this year.
A €300 lump sum payment will be made to recipients of the Fuel Allowance in the last quarter of this year.
An additional €200 will also be paid this year to recipients of the Living Alone Allowance.
Once-off double week "Cost of Living Support" payment to all qualifying Social Protection recipients to be paid in January and will include pensioners, carers, people on disability payments and jobseekers.
A special, once-off 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.
A €400 lump sum payment will be made to recipients of the Working Family Payment later this year.
A once off reduction of the student contribution fee by €1,000 for free fees students; a once-off reduction of approximately 33% in the contribution fee for apprentices in higher education and an increase in the Post Graduate Tuition fee contribution by €1,000 for student grant recipients.
Recognising that the rising costs also have impacts for businesses across the country, a scheme of business supports worth €250 million is being introduced.
Recurring payments
An increase of €12 per week for individuals in receipt of a weekly Social Protection payment from January 2024.
Child Benefit extended to 18-year-olds in full time education from September 2024.
An increase in the income threshold for Carer’s Allowance to €450 for a single person and €900 for a couple.
An extension of the fee reduction on school transport services for a further year, an extension of the fee waiver for students sitting state exams, a €60 million capitation payment for schools to continue to meet increased running costs and funding for supports for the most disadvantaged groups.
Free schoolbooks scheme to be introduced for junior cycle pupils in recognised post primary schools within the Free Education Scheme from September next year.
Budget 2024 – Summary
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For further information on any of the above matters, please contact: Robert Lohan:- Email: rlohan@dhkn.ie
or
info@dhkn.ie
Galway Financial Services Centre, Moneenageisha Road, Galway. Tel: 091-782020, Fax: 091-782050, w: www.dhkn.ie Email: info@dhkn.ie 78 Merrion Square, Dublin 2. Tel: 01- 4825822, w: www.dhkn.ie Email: info@dhkn.ie This newsletter is intended as a general guide to the subject matter and should not be used as a basis for decisions. Whilst every effort has been made to ensure the accuracy of the content, no liability can be taken for any omissions or errors. Professional taxation advice should always be taken prior to proceeding with any transaction giving rise to tax consequences.
Budget 2024 – Summary
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