Minister for Finance Michael McGrath and Minister for Public Expenditure and Reform Pascal Donohoe unveiled a €14bn expenditure package in their Budget speeches earlier today. Minister McGrath’s stated aims are that of providing support to people in the cost of living crisis and supporting businesses in an era of rising inflation and interest rate hikes. Please refer to BKK’s guide to Budget 2024 below to find out what today’s announcement means for you.
- R&D Tax Credit – The tax credit for qualifying R&D expenditure is being increased from 25% to 30% in respect of 2024 expenditure. The first year payment threshold allows for a claim up to the threshold amount to be paid in full in year 1, rather than over 3 years. This is an increase from €25,000 to €50,000 claimable in year 1.
- New Capital Gains Tax relief for Angel investment in innovative start-ups – A new CGT relief for angel investment in innovative start-ups is being introduced. Qualifying investors can benefit from a reduced rate of capital gains tax for gains arising from the disposal of a qualifying investment in a qualifying company.
- 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 must be in the form of fully-paid up newly issued shares costing at least €10,000 and constituting between 5% and 49% of ordinary issued share capital of the company.
- The scheme will include a certification process, which will be carried out by Enterprise Ireland.
- Qualifying investors may avail of an effective reduced rate of 16%, or 18% if through a partnership, on a gain up to a maximum of up to twice their initial investment.
- Employment Investment Incentive (EII) – 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.
- 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.
- KEEP – EU State aid approval to commence the outstanding 2022 amendments to this Programme has been secured. The amendments include the extension of the scheme to the end of 2025 and a doubling of limit for the total market value of issued but unexercised qualifying share options from €3 million to €6 million.
- Film Tax Credit – 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 scheme is being extended for a further two years to 31 December 2025.
- BIK Measure: OMV 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.
- 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 of 2025, followed by a reduction to €20,000 in 2026 and €10,000 in 2027.
- Income Tax Credits (Personal, Employee and Earned Income Credit) –
- An increase of €100 in the Personal Tax Credit from €1,775 to €1,875.
- An increase of €100 in the Employee Tax Credit from €1,775 to €1,875.
- An increase of €100 in the Earned Income Credit from €1,775 to €1,875.
- Home Carer Tax Credit – An increase of €100 in the Home Carer Tax Credit from €1,700 to €1,800.
- Single Person Child Carer Tax Credit – An increase of €100 in the SPCC Tax Credit from €1,650 to €1,750.
- Incapacitated Child Tax Credit – An increase of €200 in the Incapacitated Child Tax Credit from €3,300 to €3,500.
- Income Tax Band – An increase in the Standard Rate band by €2,000 to €42,000.
- USC – 3rd USC Rate band (4.5% rate) will drop to 4%. The 2nd USC Rate band ceiling will increase from €22,920 to €25,760. The combined USC changes will benefit workers by nearly €300 a year. This is in line with the €1.40 increase in the national minimum wage.
- Energy Rebate – a rebate of household energy costs to be paid in three instalments of €150, to help households with rising electricity and gas costs. €150 will be payable this side of Christmas.
- Sea-going Naval Personnel Tax Credit – extended until 31 December 2024.
- From 1 January 2024, the existing VAT registration thresholds are being increased from €37,500 for services and €75,000 for goods to €40,000 and €80,000 respectively.
- E-books/Audiobooks 0% rated from 1 January 2024 in line with print books
- The 9% VAT reduction for gas and electricity is being extended for an additional 12 months, until 31 October 2024.
PROPERTY RELATED MEASURES
- Vacant Home Tax – Increased to 5 times the amount of a property’s existing base Local Property Tax liability. This increase will take effect from the next chargeable period, commencing 1 November 2023.
- Mortgage Interest Tax Relief – The measure will allow homeowners with loans of between €80,000 and €500,000 at the end of 2022 to claim 20% tax relief on the rate increases in 2023 compared to 2023 up to a maximum credit of €1,250.
- Rent Tax Credit – The rental tax credit has been increased from €500 to €750 per annum. This credit is available to those paying rent on their principal private residence and not in receipt of other housing assistance payments. 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.
- Rented Residential Reliefs – A new tax relief for landlords is being introduced. It will provide a relief on residential rental income. The cash effect of the relief will be as follows: €600 in 2024; €800 in 2025, €1,000 in 2026 and 2027. A full claw-back of the benefit of the relief applies in the event the landlord removes the property from the rental market within 4 years. There is no claw back after the expiry of the 4-year period.
- Help To Buy Scheme – The HTB scheme is being extended until 31 December 2025.
- Consanguinity (Stamp Duty) Relief – This stamp duty relief is being extended to 31 December 2028.
- Accelerated Capital Allowances – Farm Safety Equipment – This scheme 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.
- College Fees – 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.
- Free School Books – Scheme for free schoolbooks to be extended for the first three years of secondary school.
- Cigarettes – Confirmed increase by 75 cents per packet, with a pro-rata increase on other tobacco products.
- Social Protections Payments – Across the board increases in all social protection payments of at least €12 per week.
- Child Benefit – Extension of the Child Benefit payment to 18-year-olds in full time education.
- Cost-of-living Support – A once-off double week “Cost of Living Support” payment to all qualifying Social Protection recipients. This will be paid in January.
- Christmas Bonus – The normal Social Welfare Christmas bonus will be paid in early December.
- Foster Care Allowance – A double payment of the Foster Care allowance will also be made this year.
- Living Alone Allowance – A once off payment of €200 to those receiving the Living alone allowance.
- Fuel Allowance – A €300 lump sum payment will be made to recipients of the Fuel Allowance in the last quarter of this year
- Disability Allowances – A once off payment of €400 to those receiving the Disability Allowance, Invalidity Pension and the Blind Pension to be paid in later this year.
- Working Family Payment – A €400 lump sum payment will be made to recipients of the Working Family Payment later this year, as well as raising the income threshold by €54 a week.
- Fuel Allowance – A €300 lump sum payment will be made to recipients of the Fuel Allowance in the last quarter of this year.
- Carer support grant – A Once off payment of €400 to be made before Christmas 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.