Budget Summary 2024

Overview

The Minister for Finance today announced a total core Budget 2024 package of €6.4 billion, including taxation measures worth €1.1 billion. For the first time in living memory a Minister for Finance delivered a speech unheckled!

The announcements reduce the tax burden on taxpayers, increase supports for welfare recipients with some further energy cost supports included.

The domestic economy is expected to grow by 2.25% next year, and a €8.4bn budget surplus expected next year, with National debt moving in the right direction.

The Minister said that Budget 2024 marks a step change in how we plan for the future, by putting in place a long-term plan that will make the economic future safer for all.

He announced two major new funds:

• The Future Ireland Fund, with a potential to grow to over €100 billion by the middle of the next decade, will help to protect living standards and public services for current and future generations
• €14 billion will be put aside in the Infrastructure, Climate and Nature Fund by 2030 to allow for sustained levels of investment in infrastructure in the event of economic downturns and to support climate and nature related projects.

Measures
A summary of the main tax features in this afternoon’s budget are as follows:

Personal Tax

• Income Tax Standard Rate Band increased to €42,000 (from €40,000) for a single person with a corresponding increase for other taxpayers.
• €100 increase in personal tax credit, employee tax credit and earned income credit.
• USC second rate band (2%) increased from €22,920 to €25,760.
• USC 4.5% rate reduced to 4%.
• Reduced rate of USC for medical card holders is being extended to 31 December 2025.
• Home Carer Credit and Single Person Child Carer Tax Credit increased by €100.
• €200 increase in Incapacitated Child Tax Credit.
• The income tax exemption for the microgeneration of electricity doubles to €400.
• Mortgage interest relief introduced for 2024 (only). Capped at €1,250 per property. For homeowners with an outstanding mortgage balance on their principal private residence of between €80,000 and €500,000 on 31 December 2022. Qualifying homeowners will be eligible for mortgage interest tax relief in respect of the increase in interest paid on that loan between the year 2022 compared to the year 2023, at the standard rate of income tax (20%).
• Motor vehicle BIK €10,000 additional reduction retained for 2024, and BIK relief cap of €35,000 for electric vehicles (€45,000 including the additional reduction) is being retained for 2024 and 2025.

Capital Gains Tax

• The age limit for Retirement Relief is increased from 66 years of age to 70. For disposals to a child, the relief has a new limit of €10m for disponers up to the age of 70T his applies from 1 January 2025.
• A new Capital Gains Tax relief for Angel investment in innovative start-ups was announced. A reduced CGT rate of 16% or 18% applies to a maximum gain of twice the initial investment. The investment by the individual must be in 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. A lifetime limit of €3m applied on gains to which the reduced rate of CGT will apply.

Energy Supports

Electricity credit – Three more instalments of €150 each for all households will be paid in December 2023, January/February 2024 and March/April 2024.

Corporate Tax

• R&D Tax credit is being increased from 25% to 30% for expenditure incurred in 2024. The first year payment threshold increases from €25,000 to €50,000.
• The Accelerated Capital Allowances (ACA) scheme for Energy Efficient Equipment is being extended for a further two years to 31 December 2025.

Value Added Tax

• VAT registration thresholds increased to €40,000 for services and €80,000 for goods.
• Temporary extension of 9% VAT rate for gas and electricity until 31 October 2024.
• Application of a 0% VAT rate for audiobooks, ebooks and for solar panels in schools.

PRSI

All rates will increase by 0.1% from October 2024.

Housing

• Rent Tax credit for private tenants increased from €500 to €750 and is extended to include “students in digs”. The credit will be backdated for 2022 and 2023 for parents paying for their children’s accommodation
• New rental relief for landlords at the standard tax rate on €3,000 for 2024, increasing to €4,000 in 2025 and €5,000 in 2026 and 2027. Landlords will need to retain the property rented for the 4 years in order to avoid a full clawback of the relief. This is worth €600 in 2024. Further detail will be included in the Finance Bill.
• Vacant Homes Tax increased to 5 times the LPT liability for the property (up from 3 times).
• Help to Buy scheme extended to 31 December 2025. The scheme is also being amended to reflect its interaction with the Local Authority Affordable Purchase Scheme (LAAP).

Farming Sector

• Stamp Duty Consanguinity relief is being extended to 31 December 2028.
• Accelerated capital allowances for farm safety equipment extended to 31 December 2026.
• Increase in the lifetime value of reliefs for Young Trained Farmers and Farm Succession Partnerships from €70,000 to €100,000.
• The Farmer’s VAT flat rate addition will decrease from the current 5.0% to 4.8% from 1 January 2024.

Other Measures

• 75c additional duty on a pack of 20 cigarettes with pro rata increases for other tobacco products from midnight tonight.
• Changes to EII holding periods and investment limits, with the investor limit increased to €500,000.
• Increase in Film Relief expenditure cap to €125m.
• Carbon Tax increase from 48.50% to 56.00% per tonne of CO2. The rate will apply to auto fuels from midnight, and other fuels from 1 May 2024.
• VRT relief for battery electric vehicles extended to 31 December 2025.
• Increase in threshold for tax relief on donations of heritage items, from €6m to €8m.
• Foster children are likely to avail of group B threshold for CAT purposes. More details expected in the Finance Bill.
• Weekly social welfare rates will be increased by €12.
• €300 lump sum fuel allowance will be made to Fuel Allowance recipients in the last quarter of 2023.
• €200 lump sum will be made to Living Alone Allowance recipients in 2023.
• €400 lump sum will be made to Working Family Payment recipients in 2023.
• Qualifying Social Protection recipients will receive a once-off double week (including pensioners, carers and those on disability payments and jobseekers) in January 2024, with Christmas Bonus payable in early December.
• The free school books scheme will be extended to all junior cycle pupils in recognised post primary schools within the Free Education Scheme from September next year.
• Increased Revenue compliance underway in 2024 particularly in the areas of eCommerce, payroll and expenses reporting and the cash/shadow economy.
• Extension of the fee waiver on school transport services for a further year.
• Once off reduction of the student contribution fee by €1,000 for free fees students.
• Families with income of less that €100k will have college fees for undergraduate students halved to €1,500.

The link to the relevant Department of Finance papers is included here.

Please contact a member of the Keogh Ryan Tierney Tax Team if you have any queries.
The Keogh Ryan Tierney Tax Team – 10 October 2023

This does not constitute advice. Advice should be taken from a professional advisor before any actions are taken.