The Irish government announced the Irish budget 2024 on the 10th of October 2023.
The budget outlines the government’s spending and revenues, including all government departments, agencies, non-commercial state bodies, and the local government sector.
The budget for 2024 was framed against a backdrop of global uncertainty and providing support for businesses and families.
If you have any questions about these changes, please contact your accountant or a trusted advisor. We’re here to help.
Changes to VAT
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VAT registration thresholds
There will be an increase in the existing VAT registration thresholds for businesses from €37,500 for services and €75,000 for goods to €40,000 for services and €80,000 for goods respectively.
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Solar panels in schools
The zero VAT rate on the supply and installation of solar panels is being extended to schools from 1 January 2024.
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Temporary VAT rate for gas and electricity
The 9% VAT rate for gas and electricity will be extended for 12 months, until 31st October 2024.
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Audiobooks & ebooks
Audiobooks and ebooks will be zero-rated for VAT from January 1st, 2024.
Measures to support Irish businesses
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Research and Development (R&D) tax credit
The R&D Tax Credit will increase from 25% to 30%. The first-year payment threshold doubles 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 relief for angel investors
Angel investors are set to benefit from a reduced rate of Capital Gains Tax when they dispose of a qualifying investment.
Personal Income Tax changes
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USC (Universal Social Charge)
The 4.5% rate of USC is reduced to 4%. This is the first reduction in USC rates in 5 years.
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Income tax cut off point
The standard rate band for income tax will increase by €2,000, from €40,000 to €42,000.
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Tax credits
The main tax credits (Personal, Employee and Earned Income Credit) will be increased by €100 each.
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Minimum wage
Minimum wage will increase to €12.70 per hour, seeing an increase of €1.40 per hour, in January 2024.
Tax credits
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Children
The Home Carer Tax Credit will increase by €100 to support stay-at-home parents and the incapacitated child tax credit is being increased by €200.
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Rental
The rent tax credit of €500 will increase to €750 per year for taxpayers who are paying rent on their principal private residence. Parents who pay for their student children who have tenancies in 'Rent a Room' or 'digs' accommodation are now allowed to claim the Rent Tax Credit. This will be backdated to allow for claims for 2022 and 2023.
Additional tax measures
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Benefit in Kind
The temporary universal relief of €10,000 to the Original Market Value for company cars is being extended for another year, encouraging more electric cars for company car purposes.
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Mortgage Interest Tax Relief
Relief will be available on increased interest paid on mortgages in 2023 as compared with the amount paid in 2022. The relief will be capped at €1,250 per property.
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Landlords
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.
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Employment Investment Incentive Scheme
The amount an investor can claim relief on for four-year investments under the Employment Investment Incentive Scheme has doubled to €500,000.
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Selling residual electricity to the grid
The personal income tax disregard for households selling residual electricity to the grid will double to €400.
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KEEP (Key Employee Engagement Programme)
The Key Employee Engagement Programme will be extended to the end of 2025 and expanded.
Changes to allowances - social welfare measures
- 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 be paid this year to recipients of the Living Alone Allowance.
- 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 double payment of the Foster Care allowance will also be made this year.
- A €400 lump sum payment will be made to recipients of the Working Family Payment later this year.
- There will be a once off reduction of the student contribution fee by €1,000 for free fees students.
- Child Benefit payment is being extended to 18 year olds in full time education.
- Parents benefit will be extended to nine weeks from August 2024.
A note from the CEO of Accountant Online, Larissa Feeney FCA
Without a doubt, the biggest winners are those on minimum wage, but the measures are wide-ranging and will benefit both workers and social welfare recipients.
I was very happy to see positive announcements for startups, including an increase in the R&D tax credit from 25% to 30%, Capital Gains Tax relief for angel investors and modifications to EIIS and KEEP schemes.
For our small business clients, there has been an announcement of a 250m business support scheme, but more information is needed on when and how this will be delivered. This detail is vital, especially as small businesses will carry the burden of the increase in minimum wage.
In summary, a broad budget with something for everyone – I will look forward to the release of the Finance Bill next week to reveal the details of the various announcements made.
Larissa is a Fellow Chartered Accountant (FCA) and is the CEO of Accountant Online, which specialises in company formation, company secretarial, annual accounting services, bookkeeping, tax, and payroll services for micro and small companies in Ireland and the UK.
