The 2024 Budget details were announced in Dail Eireann and presented by the Minister for Finance, Michael McGrath and Minister for Public Expenditure Paschal Donohoe on the 10th of October which outlined a multibillion package of spending increases, once-off payments and tax cuts. Here we highlight the main points of interest.
Key Points from the Budget 2024 Speech:
− There is a reduction of 0.5% in the 4.5% USC rate that will now apply to incomes between €25,760 and €70,044. The 2% rate band ceiling has been lifted by €2,840. Incomes of less than €13,000 are exempt from USC.
− The standard rate threshold for income taxpayers has been increased from €40,000 to €42,000.
− An increase of €100 in the personal tax credit, the employee tax credit, the earned income credit, the home carer tax credit, the single person child carer tax credit, and an increase of €200 in the incapacitated child tax credit.
− The 9% VAT reduction for gas and electricity is being extended by 12 months until 31October 2024.
− The rent credit for private renters, which was introduced in Budget 2023, has been increased from €500 to €750.
− For private landlords, 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, provided the property remains in the rental market for the full 4 years of the scheme.
− Three energy credits of €150 each will be given to households, between the end of 2023 and April 2024.
− In relation to Capital Gains Tax Retirement Relief, there will be an increase the age limit from 66 to 70 and a limit of €10 million on the relief available for disposals.
− Vacant Homes Tax – increase to five times the property’s LPT charge.
− The Research and Development (R&D) Tax Credit is being increased from 25% to 30%. The first-year payment threshold is being doubled from €25,000 to €50,000 to ‘provide valuable cash-flow support to companies engaged in smaller R&D projects.’
− A new capital gains tax relief for angel investors has been announced, which will allow these investors to benefit from a reduced rate of Capital Gains Tax when they dispose of a qualifying investment.
− 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.
− The Government will be publishing legislation in the Finance Bill to implement the 15% minimum effective tax rate for large companies as provided for under the OECD Pillar Two agreement.
− 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.
− A one-year Mortgage Interest Tax Relief will be introduced for homeowners with an outstanding mortgage balance on their primary dwelling house of between €80,000 and €500,000 as of 31 December 2022. The added relief will be available on increased interest paid on mortgages this year as compared with the amount paid in 2022, at the standard rate of 20% income tax. The relief will be capped at €1,250 per property. Around 165,000 mortgage holders will benefit from the measure with an estimated cost of €125 million.
− 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 to-value requirement, thereby facilitating access to all LAAP purchasers to the HTB scheme. This will come into effect from 11 October 2023.
− A Future Wealth Fund is being set up to address long-term challenges such as ageing population. 0.8% of GDP will be allocated annually, with the aim of reaching €100 billion by 2035.
− An Infrastructure, Climate and Nature Fund will be set up. €2 billion will be allocated annually for 7 years. In 2024, €2 billion will be allocated from the dissolution of the National Reserve Fund.
− The accelerated capital allowances scheme for energy efficient equipment is being extended for a further two years.
− The tax disregard in respect of personal income received by households who sell residual electricity from micro-generation back to the national grid is being doubled.
− The Minister for Finance is currently undertaking a review of the funds sector. The review will report to the minister next summer and will examine a ‘Life Assurance Exit Tax.’ Once the review is completed, the Minister will then consider any changes to the taxation framework.
− 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. To make it easier for business to avail of supports, a dedicated Tax Administration Liaison Committee (TALC) subgroup will be set up.
− 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.
− No change announced in the DIRT rate of 33%, exit tax rate of 41% or in the 1% life assurance premium levy.
− The maximum personal rate of State Pension and other Social Welfare benefits increases by €12 pw, with proportionate increases for qualified adults and those on reduced rates of payment.
− No changes in private pension tax reliefs, limits or taxation of benefits.
− No change in CAT rates or Threshold amounts.
− No change in CGT rate.
− No immediate change in PRSI rates, employer or employee. However, all PRSI rates are due to increase by 0.1% on 1 October 2024 to fund pension provision following the decision not to increase the state pension age.
− Help to Buy Scheme extended to end of 2024.
− Other taxation and pension changes not announced in the Budget could be introduced later in the Finance Bill 2024.
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