Today, 30^th October 2024, the Chancellor of the Exchequer, Rachel Reeves, delivered the UK Autumn Budget.  She announced the publication of the Corporation Tax Roadmap.  In it, she confirmed that there would be no change to the current corporation tax rate, which is capped at 25%, until 31^st March 2027.  The Small Profits Rate and marginal relief will remain at their current rates and thresholds.  No changes will be made to other business tax areas including:

1. The current Patent Box and Intangible Assets Regime which will be maintained.

 

2. The Audio-Visual Expenditure Credit will be maintained.  The Video Game Expenditure Credit will also be retained.

 

3. With regard to Capital Allowances, full expensing for plant and machinery expenditure will be retained.  The £1 million Annual Investment Allowance will also be maintained.

 

4. 100% first year allowances for qualifying expenditure on zero-emission cars and electric vehicle charge points will be extended to 31^st March 2026.

 

5. In relation to R&D Reliefs, the current rates for the merged R&D Expenditure Credit Scheme as well as the Enhanced Support for R&D Intensive SMEs will be kept.

 

6. Support to the global taxation agreements under Pillar 1 and Pillar 2 will continue.

 

 

 

Business Tax Changes

 

• The Pillar Two Undertaxed Profits Rule will be introduced into law and will take effect from 31st December 2024.

 

• The Government have introduced changes to the taxation of Employee Ownership Trusts and Employee Benefit Trusts which will take effect from 30^th October 2024.

 

• For 2025/26, Retail, Hospitality and Leisure businesses will be given 40% relief on their business rates. The maximum amount available in relief each billing year is £110,000 per business.

 

• From 6^th April 2025, the special tax rules for Furnished Holiday Lets will be abolished. Individuals, corporates, and trusts who operate or sell furnished holiday lettings accommodation will be affected.

 

• Employer National Insurance contributions will increase to 15.0% from 6^th April 2025. The secondary threshold will be reduced to £5,000 per year, the Employment Allowance will be increased to £10,500 per annum while the £100,000 threshold will be removed.

 

• There will be further consultation on Transfer Pricing.

 

• Changes to the treatment of carried interest. From April 2025, the CGT rate applicable to carried interest will increase to 32%.

 

 

 

 

Anti-Avoidance Legislation

 

The Government have introduced new Anti-Avoidance legislation in respect to loans to participators.  From 30^th October 2024, these reforms will prevent shareholders from extracting untaxed funds from Close Companies. This new legislation is being introduced to prevent loans which are repaid and then reborrowed from associated companies from avoiding the s455 charge.

 

 

Also, from 30^th October 2024, the way in which capital gains are taxed when a Limited Liability Partnership is liquidated has been amended. It relates to situations where assets are disposed of to (i) a contributing member, (ii) a connected company or (iii) any other connected person.  The chargeable gain accruing to the contributing member will be computed as if the gain had arisen at the time they initially contributed the asset to the Limited Liability Partnership.

 

 

 

 

 

For further information, please click:

https://www.gov.uk/government/collections/autumn-budget-2024-tax-related-documents

 

 

 

For all your Irish, UK or cross-border business tax concerns, please contact us on queries@accountsadvicecentre.ie

 

 

 

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

 

 

Today, 7^th October 2024, the Minister for Social Protection announced that the pensions auto-enrolment scheme will commence on 30^th September 2025. From that date, employers must automatically enroll eligible workers into a workplace pension scheme, as part of a Government initiative, aimed at boosting retirement savings.

 

 

 

Who is it for?

This government retirement savings system is for employees who are not already contributing into a pension scheme through their payroll. The Automatic Enrolment Retirement Savings Systems Act 2024 was signed into law on 9^th July of 2024 and a commencement order was signed on 30^th September 2024.  This scheme involves mandatory employer and employee making contributions into a pension fund, in addition to a Government top up.  As a result, with this new auto-enrolment scheme, most workers will now be entitled to:

(i) their own pension plus

(ii) the State Pension on retirement.

 

 

 

 

What is the Pensions Auto-Enrolment Scheme?

 

Under this new Act, the following apply:

• Employees will be automatically enrolled in this scheme if they are aged between 23 and 60 years. It’s important to keep in mind, however, that the employee can voluntarily opt out after six months.

 

• This auto-enrolment scheme will apply to every private sector worker in Ireland.  This is provided that the employee is not in what is termed “exempt employment.”

 

• The employee must earn more than €20,000 gross per year. For this purposes, gross pay includes allowances as well as non cash benefits.

 

• For employees earning less than €20,000 per year or who are outside the prescribed age range, they can opt in voluntarily.

 

• Contributions will be made by (i) the employee, (ii) the employer and (iii) the Government.

 

• The scheme will be managed by the National Automatic Enrolment Retirement Savings Authority.  This is under the supervision of the Pensions Authority.

 

• In situations where an employee previously contributed to a pension but has since stopped, that individual can be enrolled in the scheme.  This is provided they meet the relevant criteria.

 

• Employer AE contributions will not be taxed as a benefit-in-kind on the employee.

 

 

 

 

What is an “exempt employment”?

 

The scheme is aimed at employees who are not paying into a qualifying pension plan.  Therefore, an ‘exempt employment’ is deemed to be one where an employee or employer is already making contributions, through the payroll system, to any of the following:

 

(a) an occupational pension scheme,

 

(b) Personal Retirement Savings Account,

 

(c) a Retirement Annuity Contract or

 

(d) a Pan-European Personal Pension Product.

 

 

 

 

 

What are the Auto-enrolment contribution rates?

 

 

1. Contributions to the auto-enrolment pension scheme will be based on a set percentage of your wage/salary and deducted through payroll.

 

 

2. Employers must match their employee contributions.

 

 

3. The Government must match one third of the employee contribution.

 

 

 4. The Contributions will gradually increase over a ten year period.

 

 

5. The employee contributions will not qualify for income tax relief.

 

 

6. Contributions are capped at €80,000 of an employee’s gross annual salary/wage.  In other words, an upper annual limit of €80,000 applies to earnings.  No contributions are required on earnings exceeding this cap.  Employees earning more than €80,000 per annum can still contribute.  However, employer and Government contributions will not apply to earnings above €80,000.

 

 

 

No. of Years	Employee Contribution	Employer Contribution	Government Contribution
1  to 3	1.5%	1.5%	0.5%
4 to 6	3%	3%	1%
7 to 9	4.5%	4.5%	1.5%
10+	6.0%	6.0%	2.0%

 

 

 

Final Points

 

• As the Auto-Enrolment Pension Scheme operates throughout your career, you don’t have to do anything if you move jobs.

 

• In the event of the death of an auto-enrolled employee, their personal representative can apply to access the balance in the employee’s account, as part of their estate.

 

• An employee can suspend their contributions at any time.

 

• Directors who are deemed to be “self-employed” for PRSI purposes are not considered eligible to contribute to this Auto-Enrolment Pension Scheme.

 

• The Automatic Enrolment Retirement Savings Systems Act 2024 provides for a number of offences.  These sanctions range from fines of €5,000 to €50,000 and/or imprisonment, depending on the particular offence committed.

 

 

 

 

For further information, please click:

 

https://www.gov.ie/en/publication/c6d6a-auto-enrolment-your-questions-answered/?referrer=https://www.gov.ie/en/publication/01568-auto-enrolment-your-questions-answered-rol-draft/

 

https://www.irishstatutebook.ie/eli/2024/act/20/enacted/en/html

 

https://www.youtube.com/playlist?list=PLfOMyQE5RqGzeqOMKqB1M3KyOCtKU8bjk

 

 

 

 

 

 

With over thirty years of experience, Accounts Advice Centre specializes in delivering reliable and tailored payroll services to a wide range of clients.  This ranges from sole employers to large organisations. Our focus is on tax compliance while ensuring we meet the needs of each and every business, individual, employer and employee.  If you would like to discuss our payroll services, please contact us at queries@accountsadvicecentre.ie

 

 

 

 

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

 

 

 

 

The Minister for Finance Jack Chambers published his first Budget today  announcing a number of changes to our corporate tax regime.  As a result, a raft of tax measures and policies will be introduced to support Irish start-ups, small and medium-sized enterprises (SMEs) and multinational businesses.  Budget 2025 provided for a total budget package of €10.5b.  Our focus in this article, however, is purely on Business Taxes under Capital Gains Tax, Corporation Tax, VAT and Employer/Employee Taxes.

 

 

So, what are the Tax changes introduced?

 

Here is a summary of the Tax Measures under VAT, payroll taxes, CGT and Corporation Tax:

 

 

 

VAT Changes

1. VAT registration thresholds

2. Extension of the temporary 9% VAT rate in relation to supplies of gas and electricity for an additional six months.

3. Increase in the farmer’s flat rate addition from 1^st January 2025.

4. Introduction of a new 9% VAT rate on heat pumps.

 

 

 

Payroll Changes

5. Amendments to the Benefit-in-Kind (BIK) on cars

6. Increase in the annual employee Small Benefit Exemption from €1,000 to €1,500. A business will also be able to give five non-cash benefits to their employees in a single year.

 

 

 

 

Capital Gains Tax Changes

7. Amendments to Retirement Relief.

8. Amendment to Relief for Angel Investors.

 

 

 

Corporation Tax Changes

9. Corporation Tax Changes in relation to EII, SURE and SCI

10. Participation Exemption – Exemption for companies in receipt of Foreign Dividends

 

 

 

 

Let’s start with VAT.  

• With effect from 1^st January 2025, the VAT registration thresholds will be increased from €40,000 to €42,500 for services.

• The VAT registration thresholds will be increased from €80,000 to €85,000 for goods with effect from 1^st January 2025.

• The unregistered farmers flat rate scheme will be increased from 4.8% to 5.1%.

• There will be an extension of the reduced 9% VAT rate on electricity and gas up to 30^th April 2025.

• From 1^st January 2025, the 9% VAT rate will also apply to heat pump installations. This will have the effect of reducing the cost of replacing inefficient boilers.

 

 

 

 

Next, the EMPLOYER / EMPLOYEE TAX changes:

 

SMALL BENEFIT EXEMPTION

• There will be an increase in the annual limit of the small benefit exemption from €1,000 to €1,500.

• It has also been amended to allow five non-cash benefits, up from two, to be granted by an employer in a single year. The cumulative total of the first five benefits in a calendar year cannot exceed €1,500.

• From 1^st January 2024 an employer is required to return details of all qualifying incentives provided to employees where the small benefit exemption applies.

• This benefit can be given to any employee of the company, including directors and shareholders, providing they are on the payroll.

 

 

BENFIT-IN-KIND

• Budget 2025 introduced a BIK exemption for home car chargers provided by employers. It provides for an exemption from Benefit-in-Kind where it is the employer who incurs the cost of providing a facility for electric charging of vehicles at the home of an employee or director.

• There is a deferral of the proposed tapering of Benefit-in-Kind Relief for electric vehicles. The universal relief of €10,000 which applied to the Original Market Value of a vehicle in Category A – D is being extended to 31^st December 2025.  The amendment to the lower limit of the highest mileage band has also been extended until 31^st December 2025.   Therefore, the highest mileage band is entered into at 48,001km.

 

 

 

 

 

Here are some CAPITAL GAINS TAX changes:

 

RETIREMENT RELIEF

 

Retirement Relief (CGT) supports the cost effective / tax efficient transfer of businesses and farms from one generation to the next.

Finance Act 2023 introduced a number of amendments to the Retirement Relief regime which included:

1. an increase in the upper age limit from 66 years old to 70 years old.

2. A cap of €10 million of proceeds / market value where the individual disposing of the assets to a child is aged from 55 to 69 years.

3. The current limit of €3million will continue to apply but only from age seventy.

 

 

When do these changes come into effect?

These changes were to come into effect on 1^st January 2025.

 

 

 

What about the upper age limit?

Budget 2025 will retain the increased upper age limit.

 

 

 

What about a clawback period?

It also introduced a clawback period of twelve years on the Relief.

 

 

 

What does that mean?

This means that any tax arising due to the cap of €10 million will be abated provided the assets are retained for twelve years.

 

 

 

To clarify:

In other words, the €10 million cap, due to be introduced on 1^st January 2025, will only apply in circumstances where the child disposes of the assets within twelve years.

 

 

 

ANGEL INVESTOR RELIEF

 

Angel Investor Relief, introduced in Budget 2024.  It was aimed at encouraging business angel investment in innovative start-ups.

Finance Act 2023 introduced a reduction on this rate for angel investors, bringing it down from 33% to 16% or 18%.

 

 

What changes did Budget 2025 bring about?

Budget 2025 provides:

(a) Capital Gains Tax Relief for a third party individual

(b) who takes a significant minority shareholding (i.e. between 5% and 49% of the ordinary issued share capital of the company)

(c) for a period of at least three years,

(d) in a certified innovative start-up small and medium enterprise (SME) company

(e) which is less than seven years old.

 

 

What form must the investment take?

The investment by the individual must be in the form of:

(a) fully paid-up newly issued shares

(b) costing at least €20,000 or €10,000

(c) if acquiring between 5% and 49% of the ordinary issued share capital of the company.

 

 

What are the effective reduced CGT rates?

• Qualifying investors will be able to avail of an effective reduced rate of CGT of 16%, or

• 18% if through a partnership,

• on a gain up to twice the value of their initial investment.

 

 

What about lifetime limits?

There was previously a lifetime limit of €3 million on gains to which the reduced rate of CGT will apply.  Budget 2025 has increased this limit to lifetime gains of up to €10 million.

 

 Therefore, the amount on which the reduced CGT rates of 16% or 18% will apply is the lowest of the following:

1. The actual chargeable gain.

2. Twice the amount of the investment.

3. €10 million less the total of all/any other chargeable gains that may qualify under this Relief.

 

 

 

There will be a number of CORPORATION TAX changes:

 

The following will be extended for a further two years until 31^st December 2025:

1. Employment Investment Incentive (EII),

2. Start-Up Relief for Entrepreneurs (SURE) and

3. the Start-Up Capital Incentive (SCI)

In addition, the EII limit on the amount that an investor can claim relief on will be doubled.  In other words, it will be increased from €500,000 to €1,000,000.

It is proposed to increase the SURE relief available to a maximum of €140,000 per year or a total of €980,000 over seven years.

 

 

Research and Development (R&D) Tax Credit

As you’re aware, the existing Research and Development (R&D) Tax Credit provides a 30% tax credit for all qualifying R&D expenditure.

 

What increased have been introduced?

The first year payment threshold will now increase from €50,000 to €75,000.

Companies with claims of between €75,000 and €150,000 will benefit from a €25,000 increase in the first instalment of their claim.

Companies with claims of in excess of €150,000 will continue to receive a first instalment amount based on 50% of the R&D Tax Credit claim.

 

 

Two new Audio-visual incentives

 

1. Tax Credit for Unscripted Productions

A new tax credit will be introduced for the unscripted film production sector.

The relief will take the form of a 20% Corporation Tax Credit for certain production expenditure up to a maximum limit of €15 million per project.

 

What is the commencement date?

The commencement will be subject to State Aid approval from the European Commission.

A cultural test will be introduced.

 

 

 

2. Scéal Uplift

The second incentive is an 8% uplift referred to as the “Scéal Uplift”.

 

What does it involve?

This involves an uplift of 8% to the existing film credit in respect of certain feature film productions.

 

How will it be applied?

It will be applied to the existing film credit.   It will result in a tax credit rate of 40% for projects with a maximum qualifying expenditure of up to €20 million.

 

Who is this incentive aimed at?

This incentive is for small to medium budget productions under the Section 481 film tax credit.

 

What is the commencement date?

As with the Tax Credit for Unscripted Productions, the Scéal Uplift is subject to State Aid approval.

  

 

 

FOREIGN DIVIDENDS

With effect from 1st January 2025, a new Participation exemption for foreign sourced dividends from subsidiaries in EU/EEA and tax treaty jurisdictions will be introduced.  The aim is to simplify existing Double Taxation Relief provisions.

Currently, Ireland operates a worldwide corporate tax regime.  This means that all the profits (both domestic and foreign) earned by an Irish resident company are subject to Irish tax.  Relief is available for any foreign taxes deducted under a ‘tax and credit’ regime.

 

What are the new rules?

Under the new rules, a company will have the option of either:

(a) claiming the participation exemption or

(b) continuing to use existing tax-and-credit relief.

 

 

 

How will this be done?

To do this, an election will have to be made in the company’s annual corporation tax return. It will apply to all qualifying dividends in that particular period.

 

 

What about non-qualifying jurisdictions?

For non-qualifying jurisdictions, the existing method of claiming double taxation relief should continue.

 

 

When will it come into effect?

The new participation exemption for foreign source dividends will come into effect from 1^st January 2025.

 

 

 

 

 

If you would like full information on Budget 2025, please click https://www.gov.ie/en/publication/e8315-budget-2025/

 

 

 

 

 

Accounts Advice Centre is a firm of Tax Accountants recognised for balancing professional corporate tax expertise with personal service.  We focus on mid-market, entrepreneurial, and family-owned businesses.  To make an appointment, please email queries@accountsadvicecentre.ie

 

 

 

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

 

 

The aim of this article is for you to understand the Tax measures of Budget 2025 which relate to property transactions, at a glance.  Today, the Minister for Finance and the Minister for Public Expenditure, NDP Delivery and Reform, announced the details of Budget 2025.  As anticipated, it introduced several tax measures in relation to property.  This article will focus on the property related tax measures introduced by Budget 2025, under the following headings:

 

1. Income Tax/Personal Tax,

 

2. Residential Zoned Land Tax (RZLT),

 

3. Stamp Duty,

 

4. Vacant Homes Tax (VHT) and

 

5. Value Added Tax (VAT).

 

 

 

 

INCOME TAX / PERSONAL TAX

 

 We intend to focus on the four main areas of change that could effect you:

 

 

 Rent Tax Credit

 

Budget 2025 raised the Rent Tax Credit

The Rent Tax Credit has been increased to:

• €1,000 for individual renters, or

• €2,000 per year for jointly assessed married couples/civil partners.

 

 

What years does this apply to?

This applies to the tax years 2024 and 2025.

 

 

What were the previous rules?

Prior to this, the Rent Tax Credit for 2024 was worth:

(a) €750 for a single individual and

(b) €1,500 for a jointly assessed married couple/civil partners.

 

 

Are these new rates backdated?

These new rates have been backdated to cover the 2024 tax year as well as the 2025 year of assessment.

 

 

 

 Mortgage Interest Relief

 

Mortgage Interest Relief has been extended.

 

 

Have there been any changes to the qualifying criteria?

There has been no change to the qualifying criteria.

 

 

What is the outstanding mortgage balance for homeowners on their Principal Private Residence?

Between €80,000 and €500,000, as of 31st December 2022.

 

 

On what will Qualifying homeowners will be eligible for this tax relief?

 In respect of the increased interest paid on their mortgage in 2024 as compared with 2022.

 

 

What tax rate applies?

Tax Relief is at the standard Income Tax rate of 20%.  The Tax Credit is capped at €1,250 per property.

 

 

How do you claim the Mortgage Interest Relief?

The taxpayer must file a Tax Return and be compliant with Local Property Tax (LPT) requirements.

 

 

 

Help to Buy Scheme

 

The Help to Buy Scheme has been extended for a further four years at the current rates until the end of 2029.

 

 

What is the aim of this scheme?

To provide certainty for future home buyers, as well as the Irish property market.

 

 

What is the “Help to Buy” Scheme?

It’s a tax rebate available to first-time buyers .  The purpose is to enable them to buy a newly built or self-built house or apartment.  This is provided the cost of that purchase is €500,000 or less.

 

 

With the extension of this scheme, first-time buyers of residential property will be able to continue to avail of:

(i) Income Tax and

(ii) Deposit Interest Retention Tax refunds

to help them purchase their home.

 

 

 

What does the Scheme offer?

 

1. A tax refund to first-time buyers, with a maximum value of €30,000 or 10% of the property price, whichever is less.

 

2. The refund will be from the four tax years prior to when the application is made.

 

3. The refund will not include any refunds already claimed.

 

 

 

 

Pre-Letting Expenses Relief

 

 

What is the Current Tax Relief?

It’s capped at €10,000 per premises. For certain pre-letting expenditure, it will be extended for a further three years to 31^st December 2027.

 

 

What does Section 97A TCA ‘97 deal with?

Rental expenses.

 

 

What does it provide?

Certain expenses, incurred on a vacant residential property before its first letting following a period of non-occupancy, are allowable as a deduction against rental income from that specific premises.

 

 

How much are pre-letting expenses?

They’re capped at €10,000 per property.

 

 

When are pre-letting expenses allowable?

They must be incurred on a property that was vacant for a minimum of six months and then let as a residential property on/before 31^st December 2027.

These provisions allow for a deduction for certain pre-letting expenses which, otherwise wouldn’t be allowable.

 

 

 

 

RESIDENTIAL ZONED LAND TAX (RZLT)

 

• As part of its strategy to meet an increased demand for housing, the Irish Government introduced the Residential Zoned Land Tax (RZLT).  It’s a new tax on land which is zoned for residential development and which has, in place, all the necessary services to develop housing.

 

• It was originally introduced in Finance Act 2021.  It stated that owners of lands which are zoned under the RZLT were to be taxed at a rate of 3% of the site’s market value from 1^st February each year commencing in 2025.

 

 

 

Who is not obliged to register for Residential Zone Land Tax?

• Owners whose properties are subject to Local Property Tax and have a garden exceeding one acre.  They will not be obliged to pay Residential Zoned Land Tax. They will, however, be required to complete and file a Tax Return containing details of the property.

 

 

Do landowners have an option to re-zone their land?

Budget 2025 has provided landowners with an option to re-zone their land.  Based on the economic activity carried out on their land, they can seek changes to the zoning maps in advance of the final maps being published on 31^st January 2025.

 

 

 

 In summary:

• A new process is available to certain landowners to obtain an exemption from the tax in 2025 where their land should not be subject to the tax.

• Budget 2025 has also introduced a twelve month deferral of the liability. This is between the date planning permission was granted and the commencement date of the development

 

 

 

 

 STAMP DUTY

 

 

New 6% Residential Rate

 

 

A new 6% rate of Stamp Duty has been introduced on residential properties from 2^nd October 2024.

 

The stamp duty rates for residential properties will now be as follows:

 

• 1% on consideration up to and including €1m

 

• 2% on consideration over €1m and up to and including €1.5m

 

• 6% on consideration over €1.5m

 

The existing stamp duty rates will continue to apply to instruments executed before 1^st January 2025 on foot of a binding contract in place before 2^nd October 2024.

 

 

 

 

 

10% rate for Bulk Purchases increased to 15%

 

• Where a person acquires at least ten residential units during any twelve month period, the higher rate of stamp duty is being increased from 10% to 15%, with immediate effect.

• The existing 10% rate will continue to apply to instruments executed before 1^st January 2025 where a binding contract was in place before 2^nd October 2024.

 

 

 

 

VACANT HOMES TAX (VHT)

 

A Vacant Homes Tax (VHT) was introduced by the Irish Government in Finance Act 2022.  The aim was to encourage an increase in the supply of residential properties available for rent or purchase. As a further incentive, Budget 2025 has increased the rate of the VHT.  The increase is from five to seven times a property’s existing base Local Property Tax (LPT) liability.

 

When will it take effect?

From 1st November 2024.  In other words, the next chargeable period for Vacant Homes Tax.

 

What does VHT apply to?

Any residential property which is occupied for less than 30 days in a twelve month period between 1st November and 31st October of the following year.

 

 

 

 

VALUE ADDED TAX (VAT)

 

 

VAT Rate on Heat Pumps

 

• A reduction in the VAT rate for heat pumps to 9% is effective from 1^st January 2025.

• This applies to the supply and installation of heat pumps.

• The heat pumps must meet specific technical standards, as outlined in the EU Directive.

• The aim is to encourage homeowners to install heat pumps to support climate action.

 

 

 

 

VAT Rate for Gas & Electricity

 

• The 9% rate of VAT on gas and electricity is to be extended until 30^th April 2025.

• The rate had been due to revert to 13½% on 1^st November 2024.

• The aim of this extension is to reduce the cost of living.

 

 

 

If you are interested in full information on Budget 2025, please click https://www.gov.ie/en/publication/e8315-budget-2025/

 

 

 

Accounts Advice Centre is a specialised firm of Accountants and Tax Consultants for property owners and landlords.  We offer dedicated services for rental income, Capital Gains Tax and landlord-specific reliefs.   If you would like to make an appointment about Irish property taxes for landlords and investors, please email queries@accountsadvicecentre.ie

 

 

 

 

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

 

 

Understand the Income Tax measures of Budget 2025 at a glance.

 

 

Today, the Minister for Finance, Jack Chambers T.D., and the Minister for Public Expenditure, NDP Delivery and Reform, Paschal Donohoe T.D., announced the details Budget 2025.  As anticipated, Budget 2025 introduced several tax measures affecting individuals, families and households.  This article will focus on the tax measure introduced by Budget 2025, specifically under the Income Tax or Personal Tax heading.

 

 

 

Standard rate band increased by €2,000

 

• The income tax standard rate band has been increased by €2,000 for all earners, resulting in the band for single individuals increasing from €42,000 to €44,000

 

• The band for Single, Widowed or Surviving civil partners, qualifying for the Single Person Child Carer Credit was raised from €46,000 to €48,000,

 

• The band for married couples/civil partners with one earner will be increased from €51,000 to €53,000 for the 2025 tax year onwards.

 

 

 

Increase in Tax Credits

 

• The Personal Tax Credit, Employee Tax Credit and Earned Income Credit will all be increased from €1,875 to €2,000.

 

• The Home Carer Tax Credit has increased from €1,800 to €1,950.

 

• The incapacitated child tax credit has been increased by €300 from €3,500 to €3,800.

 

• The Single Person Child Carer Tax Credit will be increased from €1,750 to €1,900.

 

• The Blind Tax Credit will be increased from €1,650 to €1,950.

 

• The Dependant Relative Tax Credit will rise from €245 to €305.

 

• The Rent Tax Credit has been increased for the tax years 2024 and 2025. It will be €1,000 per year for individuals and €2,000 per annum for a jointly assessed couple (married or civil partners).

 

• The Sea-going Naval Personnel Tax Credit has been extended for five years to 31^st December 2029.

 

 

 

Other Personal Tax Reliefs

 

• Mortgage Interest Relief has been extended. There has been no change to the qualifying criteria.  Homeowners must have an outstanding mortgage balance on their principal private residence of between €80,000 and €500,000 as of 31st December 2022. Qualifying homeowners will be eligible for this tax relief in respect of the increased interest paid on their mortgage in 2024 as compared with 2022. Tax Relief is at the standard Income Tax rate of 20%.  The Tax Credit is capped at €1,250 per property.  To claim Mortgage Interest Relief, the taxpayer must file a Tax Return and the taxpayer must be compliant with Local Property Tax (LPT) requirements.

 

• The Help to Buy Scheme has been extended for a further four years at the current rates until the end of 2029.

 

• Pre-Letting Expenses Relief. The current tax relief, capped at €10,000 per premises, for certain pre-letting expenditure will be extended for a further three years to 31^st December 2027.  Section 97A TCA ‘97, which deals with rental expenses, provides that certain expenses incurred on a vacant residential property before its first letting following a period of non-occupancy are allowable as a deduction against rental income from that specific premises.

 

• Various farming related Tax Reliefs have been extended until 31^st December 2027 including (a) Enhanced Stock Relief for Registered Farm Partnerships, (b) Stock Relief for Young Trained Farmers as well as (c) General Stock Relief.

 

• Budget 2025 introduced a BIK exemption for home car chargers provided by employers. It provides for an exemption from Benefit-in-Kind where it is the employer who incurs the cost of providing a facility for electric charging of vehicles at the home of an employee or director.

 

• The proposed tapering of Benefit-in-Kind Relief for electric vehicles has been deferred. The universal relief of €10,000 which applied to the Original Market Value of a vehicle in Category A – D is being extended to 31^st December 2025.  The amendment to the lower limit of the highest mileage band has also been extended until 31^st December 2025.   Therefore, the highest mileage band is entered into at 48,001km.

 

 

 

Small benefit exemption

 

• There will be an increase in the annual limit of the small benefit exemption from €1,000 to €1,500.

 

• It has also been amended to allow five non-cash benefits, up from two, to be granted by an employer in a single year. The cumulative total of the first five benefits in a calendar year cannot exceed €1,500.

 

• From 1^st January 2024 an employer is required to return details of all qualifying incentives provided to employees where the small benefit exemption applies.

 

• This benefit can be given to any employee of the company, including directors and shareholders, providing they are on the payroll.

 

 

 

Universal Social Charge

 

Various amendments to the USC system were introduced in Budget 2025.

 

• The 4% rate of USC will be reduced to 3%.

 

• The 2% USC rate band will increase by €1,622, from €25,760 to €27,382.

 

 

From 1^st January 2025, the USC Rates and Bands will be:

 

• €0 – €12,012 – 0.5%

 

• €12,013 – €27,382 – 2%

 

• €27,383 – €70,044 – 3%

 

• Balance – 8%

 

 

Self-employed income over €100,000 will be liable to a 3% surcharge i.e. 11%

 

 

 

 

PRSI

 

• All classes of PRSI will increase by 0.1% percentage point from 1^st October 2024.

 

• From 1^st October 2024 the minimum annual PRSI contribution is €650.

 

• There will be a further 0.1 percentage point in October 2025. From 1^st October 2025, (i) the employee PRSI rate will increase from 4.1% to 4.2%, (ii) the employer PRSI rate will increase from 11.15% to 11.25% and (iii) the rate will rise from 8.9% to 9% in situations where the weekly income is €496 or less.

 

• From 1st October 2025, the self employed PRSI rate will increase from 4.1% to 4.2%.

 

 

 

 

For full information on Budget 2025, please click https://www.gov.ie/en/publication/e8315-budget-2025/

 

 

 

 

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.