An €11bn Budget package was today announced by Minister for Finance Paschal Donohoe and Minister for Public Expenditure and Reform Michael McGrath. Please refer to BKK’s guide to Budget 2023 below to find out what today’s announcement means for you.
The key theme of Budget 2023 is that of tackling the cost of living, with Minister for Finance Paschal Donohoe stressing the importance of supporting businesses, families, and individuals.
- Income Tax Credits (Personal, Employee and Earned Income Credit) –
- An increase of €75 in the Personal Tax Credit from €1,700 to €1,775.
- An increase of €75 in the Employee Tax Credit from €1,700 to €1,775.
- An increase of €75 in the Earned Income Credit from €1,700 to €1,775.
- Home Carer Tax Credit – An increase of €100 in the Home Carer Tax Credit from €1,600 to €1,700.
- Income Tax Band – An increase in the entry threshold to the highest rate of income tax, meaning workers will not start to pay 40% income tax until they reach €40,000.
- USC – 2ndUSC Rate band (2% rate) increased from from €21,295 to €22,920. This is in line with the 89c increase in the national minimum wage.
- Energy Rebate – a rebate of household energy costs to be paid in three instalments of €200, to help households with rising electricity and gas costs. €400 will be payable this side of Christmas.
- Sea-going Naval Personnel Tax Credit – extended until 31 December 2023.
- Temporary Business Energy Support Scheme (TBESS) –energy scheme available to trading SME businesses that will help with the spiralling cost of electricity and heating bills. The support will pay 40% of the increase in gas and electricity that businesses are facing and will be capped at €10,000 per month. Support will be obtained on a self-assessment basis and the scheme will be administered by Revenue.
- R&D Repayment Credit – The current system of offset against corporation tax liabilities and payment in three payable instalments is being changed to a new fixed three-year payment system. The first €25,000 of a claim will now be payable in the first year, to provide a cash-flow benefit for smaller research & development projects and to encourage more companies to engage with the regime.
- Knowledge Development Box (‘KDB’) – Confirmation of the extension of KDB for 4 years to allow the relief to be available for accounting period commencing before 1 January 2027.
- Small Benefit Exemption– Increase in the annual limit from €500 to €1,000 and an extension to allow the benefit to be paid in two separate vouchers rather than one. It allows an employer to provide limited non-cash benefits or rewards to their workers without the payment of income tax, PRSI and USC. This change is applicable from 2022.
- KEEP Scheme– The Key Employee Engagement Programme (KEEP) has been extended to 31 December 2025. It is also being modified to provide for the buy-back of KEEP shares by the company from the relevant employee. Also, the lifetime company limit for KEEP shares is being raised from €3 million to €6 million.
- Foreign Earnings Deduction – Extension of Foreign Earnings Deduction (FED) to 31 December 2025.
- Special Assignee Relief Programme (SARP) – This Programme is being extended for a further three years until 31 December 2025. The threshold income to avail of the scheme is being increased from €75,000 to €100,000.
- Film Corporation Relief – confirmed as extended until 31 December 2028.
- Hospitality Sector (13.5% Rate) – It is understood the government will aim to increase the hospitality sector VAT rate back to 13.5% (from 9%) from 1 March 2023.
- Electricity/Gas (9% Rate) – Confirmed as extended until 28 February 2023 on a temporary basis.
- Newspapers (0% Rate) – Reduction to 0% VAT on newspapers. This change will be introduced from 1 January 2023.
- Defibrillators (0% Rate) – Confirmed a 0% rate of VAT will apply to life-saving defibrillators. This change will be introduced from 1 January 2023.
- Hormone Replacement (0% Rate) – Confirmed a 0% rate of VAT will apply to all non-oral hormone replacement therapies. This change will be introduced from 1 January 2023.
- Nicotine Replacement (0% Rate) – Confirmed a 0% rate of VAT will apply to all non-oral nicotine replacement therapies. This change will be introduced from 1 January 2023.
- ‘Period’ Sanitary Products (0% Rate) – Confirmed a 0% rate of VAT will apply to ‘period’ sanitary products. This change will be introduced from 1 January 2023.
PROPERTY RELATED MEASURES
- Help to Buy – Confirmed as extended until to the end of 2024. A review of this scheme is underway.
- Vacant Homes – a tax on vacant homes which will be levied on properties occupied for less than 30 days in a 12-month period. The tax will apply at a rate equal to three times the Local Property Tax of the property. The tax will operate on a self-assessed basis. There will be a number of exemptions to ensure property owners are not unfairly charged e.g. long term illness/care.
- Rental Tax Credit – a rental tax credit of €500 per annum has been introduced for those paying rent on their principal private residence and not in receipt of other housing assistance payments. The credit may be claimed for 2022 from early in 2023.
- Pre-letting expenditure for landlords – This measure is being amended to increase the level of pre-letting expenses allowable per premises to €10,000 and by reducing the period for which a premises must be vacant from twelve to six months.
- Zoned Land Tax – a number of amendments are earmarked to streamline the operation of the Residential Zoned Land Tax and ensure it is efficiently administered.
- Residential Development Stamp Duty Refund Scheme – Scheme is extended to end of 2025.
- Concrete Levy – 10% levy on concrete blocks, pouring concrete and certain other concrete products, to be introduced from April 2023. Introduced to fund Mica redress scheme.
- The Living City Initiative to be extended for a further 5 years.
- 5 Agricultural Reliefs – Extension to 5 agricultural tax reliefs that were expiring this year – these are the Young Trained Farmer and Farm Consolidation (Stamp Duty Reliefs), the Farm Restructuring (Capital Gains Tax Relief), and the Young Trained Farmer and Registered Farm Partnership (Stock Reliefs). Talks are ongoing at EU level on the duration of these extensions.
- VAT Flat-rate Compensation – percentage for Farmers reduced from 5.5% to 5.0%
- Late Night Venue (Special Exemption Application) – the cost of applying for a Special Exemption Order for late night venues has been halved from €110 to €55.
- Cider and Pear Cider – up to 50 cent excise relief to independent small producers of cider and pear cider.
- Microbrewery relief production threshold – The qualifying production threshold for microbreweries to qualify for a reduction in Alcohol Products Tax is being increased to allow the industry more scope to expand. The current production ceiling of 50,000 hectolitres will increase to 75,000 hectolitres.
- Cigarettes – Confirmed increase by 50 cents per packet, with a pro-rata increase on other tobacco products.
- Alcohol – No increase in the price of a pint or a glass of wine.
- Fuel – current excise reduction of 21 cent per litre for petrol, 16 cent per litre for diesel, and 5.4 cent per litre for Marked Gas Oil will be extended until 28 February 2023.
- Carbon Tax – The Carbon Tax rate will increase from the current rate of €41 to €48.50 per tonne of CO2. This will apply to auto fuels with effect from 12 October 2022 and all other fuels from 1 May 2023.
- Bank Levy – confirmed as extended for a further year.
- Third Level Student Contribution Fee – To be cut by €500 for eligible families earning between €62,000 and €100,000.
- Social Protections Payments – Across the board increases in all social protection payments of at least €12 per week.
- Child Benefit – A double payment of child benefit payment will be made in November (i.e. €140 additional payment per child in November).
- Cost-of-living payment –a once off double-week payment to be made in October to pensioners, carers, people on disability payments and jobseekers.
- Christmas Bonus – The normal Social Welfare Christimas bonus will be paid in early December.
- Living Alone Allowance – A Once off payment of €200 to those receiving the Living alone allowance.
- Disability Allowance – A Once off payment of €500 to those receiving the Disability Allowance, Invalidity Pension and the Blind Pension to be paid in November.
- Working Family Payment – An additional lump payment of €500 to those in receipt of the Working Family Payment, will be payable in November.
- Working Family Payment – A widening of the eligibility criteria for the working family payment to help those on lower incomes either stay in employment or take up jobs.
- Fuel Allowance – An expansion of the fuel allowance scheme to ensure more pensioners qualify for the support, increasing the income threshold from €120 to €200.
- Carer support grant – A Once off payment of €500 to be made in November to those in receipt of the grant.
The team in BKK are available to support you on the practical implications of any changes for you or your business. As always, we will be keeping a close eye on committee stage amendments until the Finance Act is signed into law and will keep you updated accordingly.