Tax News

Property Taxes Ireland, Income Tax, Business Tax, RZLT, LPT, Mortgage Relief

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.

UK Taxes. Self assessment Taxes. Personal Taxes. UK Tax Returns

In the United Kingdom, the tax year commences on 6th April and ends on the following 5th April.  HMRC have published a set of criteria which outlines the taxpayer’s requirements in order to accurately and correctly complete a self-assessment tax return.  For further information please click link:  https://www.gov.uk/log-in-file-self-assessment-tax-return

You are required to file a self-assessment form if you are a self-employed individual or if you receive untaxed income, for example, from rental properties.  In other words, the self-assessment system applies to any individual whose income is not automatically taxed at source. To check if you need to file a self-assessment tax return please click: https://www.gov.uk/check-if-you-need-tax-return

For the 2023/24 tax year, taxpayers in receipt of PAYE earnings of up to £150,000 are no longer required to file a self-assessment tax return, provided, of course, that they do not meet any of the other self-assessment criteria outlined by HMRC.

The self-assessment deadline is 31st January 2025 for online submissions, however, if you submitted a paper tax return, the deadline was 31^st October 2024.  Please keep in mind that the tax is still due by 31^st January 2025.

Online Tax Returns must be filed and all outstanding tax paid on or before 31st January following the end of the tax year.

In other words:

1. the online 2023/2024 self-assessment tax return must be submitted on or before 31^st January 2025.

2. The deadline for paying tax due for the 2023/24 tax year is 31^st January 2025 and

3. The first payment on account for the 2024/25 tax year is 31^st January 2025

Failing to file your tax return or pay your taxes by the appropriate date can result in penalties. Missing the 31^st January deadline comes can result in significant penalties even if no tax is owed.  For full details, please click: https://www.gov.uk/self-assessment-tax-returns/penalties

In summary, missing any of the Self-Assessment deadlines can result in penalties and interest. A delay in filing your Tax Return by a single day can result in a £100 fine, even if you don’t actually owe any tax.

You can register for self-assessment through the HMRC website before the deadline of 5^th October.  For further information, please click: https://www.gov.uk/register-for-self-assessment

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.

Filing Tax Returns. Income Tax. Personal Taxes. Self assessment. Sole Traders. Company Directors

The Income Tax Return filing deadline is 31st October 2024.  That deadline date is extended to 14^th November 2024 provided you file both (a) your Income Tax Return and (b) your Income Tax Balance due for 2023 plus your 2024 Preliminary Tax.

When preparing your 2023 Income Tax Return, here are some Tax Reliefs you may not have considered before:

Childminders Tax Relief Scheme

You could be entitled to the Childminder’s Tax Relief if:

• You mind three or fewer children in your own home at any one time and

• You earn no more than €15,000 per annum.

• You must have informed the HSE that you will be providing such services in your own home.

• You must be registered as self employed and registered under self assessment.

No tax will be payable on the childminding earnings received, provided the amount is not more than €15,000 per annum.

As you cannot deduct any expenses, there is no requirement to maintain and keep detailed accounts.

If another person provides childcare services with you in your home, the €15,000 income limit is divided between you.

Despite the fact that you may have no Income Tax liability, you are obliged to file a Form 11 Tax Return by 31^st October 2024 or 14^th November 2024, whichever is relevant to you.

If, however, the childminding income exceeds the €15,000 annual threshold, the total amount will be taxed as normal under the self-assessment rules.

For further details, please click: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-07/07-01-29.pdf

Irish rent tax credit

The Rent Tax Credit was introduced in Budget 2023 which is available for the tax years 2022 to 2025 inclusive.

In Budget 2024, the Rent Tax Credit was increased by €250.

When completing your 2023 Form 11 Tax Return the rent tax credit is worth a maximum of €500 per year from 2023 for a single individual and €1,000 for a married couple.

The rent tax credit is calculated as 20% of the rent paid in the year and is capped at €500 for a single person or €1,000 for a couple who are jointly assessed to tax.

When calculating your 2024 Preliminary Tax liability, the rent tax credit increases to €750 for a single individual and €1,500 for a married couple.

Please be aware that the claim must relate to rental payments which both (a) fell due and (b) were actually paid during the tax year of assessment.

This tax credit will only be available to taxpayers who are not in receipt of any other housing supports.

For further details, please click: https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/rent-credit/index.aspx

Training Course Fees

Relief is available for fees between €317 and €1,270 paid in respect of Information Technology and Foreign Language courses which are on Revenue’s list of approved Courses.

To check the eligibility of your course, please click the following links:

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/documents/education/s476-approved-languages-2009-10.pdf

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/documents/education/s476-approved-it-courses-2014.pdf

These courses must be at least two years in duration and must not be a postgraduate course. Instead postgraduate courses in foreign languages or information technology may qualify for tuition fees relief.  For further details, please click the following link: https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/education/tuition-fees-paid-for-third-level-education/index.aspx

This relief applies to fees if you are the student or if you have paid fees on behalf of another person.

For complete information, please click: https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/education/foreign-language-and-it-courses/index.aspx

To get your tax return filed before the income tax deadline, 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.

As you’re aware, the Income Tax / self-assessment Tax Return filing deadline is 31st October 2024.

There is an extension to 14th November 2024 providing you file both (i) your 2023 Income Tax Return and (ii) the Income Tax Balance due for 2023 as well as your 2024 Preliminary Tax payments though ROS.

You should register for Income Tax self-assessment if:

1. You are self-employed.
2. Your only or main source of income is from (a) Rental income, (b) Investment income, (c) Foreign income, (d) Maintenance payments, (e) Fees that are exempt from PAYE or (f) if you have profited from share options or share incentives.

You are obliged register for Income Tax purposes if

• Your taxable non-PAYE income exceeds €5,000 or
• Your gross non-PAYE income exceeds €30,000.

If you do not use ROS to file your Income Tax Return , the tax deadline remains 31^st October 2024.

What’s new in the 2023 Income Tax Return?

NON RESIDENT LANDLORDS

The Non-Resident Landlord Withholding Tax (NLWT) system came into operation on 1^st July 2023.

Collection agents of non-resident landlords may opt to use the NLWT system.

The 2023 Form 11 Income Tax Return contains a new section that should be pre-populated, providing the gross rental income figure and the withholding tax which have been processed through the NLWT.

For further information, please click: https://www.revenue.ie/en/property/rental-income/nlwt/index.aspx

For complete information, please click: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-45/45-01-04.pdf

MORTGAGE INTEREST TAX CREDIT

This credit was introduced for 2023 only.

This tax credit is for taxpayers who have made payments in respect of a qualifying loan for a principal private residence.

A new section has been added to 2023 Form 11 Tax Return for the purposes of claiming of the Mortgage Interest Tax Credit.

The relief is available to homeowners, who as of 31^st December 2022, with an outstanding mortgage balance of between €80,000 and €500,000 and meet the necessary conditions.

For further information, please click: https https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/mortgage/index.aspx

For complete information, please click: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-11B.pdf

What happens if you miss the Tax filing date?

If you fail to meet the October 31^st Income Tax Return deadline, you could be liable to an interest charge for each day you’re late.  Statutory Interest on the overdue tax liability is calculated at 0.0219% per day or part thereof.

This is in addition to a surcharge:

1. If you file your 2023 Form 11 Tax Return after 31st October 2024 but before 31st December 2024 the surcharge will be calculated as the lesser of (a) 5% of the tax due or (b) €12,695.
2. If, however, your 2023 Tax Return is submitted after the 31st December 2024, the surcharge will be (a) the lesser of 10% of the tax liability due or (b) €63,485.

Important Points to keep in mind:

1. Any underpayment of your Income Tax liability will result in interest penalties arising.

2. In order to avoid interest on overdue taxes, you must ensure that your Preliminary Tax is both (a) correct and (b) paid on time. If, for example, you pay a sufficient amount of Preliminary Tax but it’s paid after the tax deadline, then interest may accrue.

3. A late filing surcharge is computed on the full tax liability arising in the year of assessment. It does not take into consideration any advance payments / payments on account.

To get your tax return filed before the income tax deadline, 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.

Changes to Company Size – Micro Company, Small Company, Medium sized Company, Large Companies and Groups

Introduction

Today the Minister for Enterprise, Trade and Employment, Peter Burke TD, signed into law the “European Union (Adjustments of Size Criteria for Certain Companies and Groups) Regulations 2024.”   This resulted in increases in the balance sheet and turnover thresholds for ‘micro’, ‘small’, ‘medium’ and ‘large’ companies in the Companies Act 2014 by circa 25%.  The effect of this change in size is that more companies will move into the micro and small categories and, as a result, benefit through (i) abridged reporting requirements and (ii) the audit exemption.

What’s New?

On 24^th  December 2023, the EU Delegated Directive (2023/2775/EU) came into force. It increased the total balance sheet and turnover thresholds for micro, small, medium and large companies, including groups, as set out in the Companies Act 2014, by approximately 25% to account for inflation.  The measures will apply for financial years beginning on/after 1st January 2024.  This will enable companies to benefit immediately from the adjusted thresholds.  Companies can elect to apply the new thresholds either (i) to financial years beginning on/after 1st January 2024 or (ii) to financial years beginning on/after 1st January 2023.

E.U. member states have until 24^th December 2024 to bring this legislation into effect.

Today, 19th June 2024, Minister for Enterprise, Trade and Employment, Peter Burke, TD signed into law the European Union (Adjustments of Size Criteria for Certain Companies and Groups) Regulations 2024 (S.I. No. 301 of 2024) which comes into operation on 1st July 2024.

These size thresholds are contained in sections 280A to 280I of the Companies Act 2014.

Company size is typically determined by the company meeting two out of the three size criteria. Other relevant factors also apply.

These adjustments will result in more companies being categorised as micro or small which will, as a result, benefit from the abridgement and audit exemption.  These changes are to apply to financial years commencing on or after 1^st January 2024.

What are the increased company size criteria/thresholds?

The increased size criteria/thresholds are as follows:

• Micro Company –a balance sheet total not exceeding €450,000, a net turnover not exceeding €900,000 and no more than 10 average employees.

• Small Company – a balance sheet total not exceeding €7.5 million, a net turnover not exceeding €15 million and no more than 50 average employees.

• Small Group- group balance sheet total not exceeding €7.5 million net (or €9 million gross), group turnover not exceeding €15 million net (or €18 million gross) and no more than 50 average employees.

• Medium Sized Company – a balance sheet total not exceeding €25 million, a net turnover not exceeding €50 million and no more than 250 average employees.

• Medium Group- group balance sheet total not exceeding €25 million net (or €30 million gross), group turnover not exceeding €50 million net (or €60 million gross) and no more than 250 average employees.

• Large Company – a balance sheet total not exceeding €25 million, net turnover not exceeding €50 million and more than 250 average employees.

FINAL POINTS

• The legislation comes into effect from 1st July 2024

• The measures apply for financial years beginning on or after 1^st January 2024.

• Companies may elect to apply the measures on or after 1^st January 2023.

• Large company continues to be one that does not qualify as micro, small or medium in accordance with the above.

• All other qualifying conditions remain the same.

Please click for Regulations: https://www.irishstatutebook.ie/eli/2024/si/301/made/en/pdf

For associated articles, please click:

Annual Return for Companies – Ireland – Accounts Advice Centre

CRO mandatory requirement for company directors to provide PPSNs from 11th June 2023 – Accounts Advice Centre

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.

Employee (Payroll) versus Self Employed Taxes (Income Tax)

As Accountants, Personal Tax Advisors and Payroll Tax Consultants, the distinction between what constitutes an employee and what are the requirements to be considered a self employed contractor has occupied our minds for many years.  It is often very difficult to determine with complete accuracy whether an individual has been employed under a contract of service or if that same individual could be deemed to be a Sole Trader, providing a contract for services. Over the years a number of tests have been developed to determine the status of the taxpayer.  There has also been considerable case law on this matter.

What’s New?

On 20^th October 2023, the Supreme Court delivered its unanimous decision in The Revenue Commissioners v Karshan (Midlands) Ltd. t/a Domino’s Pizza [2023] IESC 24 (the “Karshan Case.”  It was held that delivery drivers of Domino’s Pizza should be treated as employees and not independent contractors.  Today Revenue published their “Guidelines for Determining Employment Status for Taxation purposes” which outlines a five step decision making framework to determine the employment status of individuals for tax purposes: eBrief No. 140/24

What is Revenue’s view?

According to Revenue:

“Where an individual is engaged under a contract of service, i.e., as an employee taxable under Schedule E, income tax, USC and PRSI should be deducted from their employment income through the employer’s payroll system on or before when a payment is made.

Where an individual is engaged under a contract for service, i.e., as a self-employed individual taxable under Schedule D, he or she will generally be obliged to register for self-assessment, to pay preliminary tax and file their own income tax returns using the Revenue Online Service (ROS).”

What does the new Guidance Material say?

The guidance material asks the following questions:

1. Does the contract involve the exchange of a wage or other remuneration for the work carried out?

In other words, there must be an exchange of work for wage/remuneration before a working relationship can be categorised as a “contract for service.”

A contract is considered to be an engagement where there is a payment by the business to the individual regardless of whether or not there is a written contract in place.

2. If so, is the agreement one pursuant to which the worker is agreeing to provide their own services, and not those of a third party, to the employer?

This test distinguishes between a situation where a worker provides services to a business personally versus where it’s possible for that worker to engage others to provide the services on his/her/their behalf.

3. If so, does the employer exercise sufficient control over the putative employee to render the agreement one that is capable of being an employment agreement?

The court judgment placed a strong emphasis on the degree of freedom the individual has to decide how the work is carried out.

It is essential to establish the level of control the business has over the individual worker.  For example, can it decide what the particular duties are, as well as how, when and where the work should be carried out?

Is the worker carrying on the business of the organisation he/she/they work(s) for or is this individual working on their own account?

In other words, to what degree is the worker/individual integrated into the business?

4. If the above three requirements are satisfied, the decision maker must then determine whether the terms of the contract between employer and worker and the related working arrangements are consistent with an employment contract, or with some other form of contract.

Apart from reviewing any written agreement in place, it is vital that the facts of the working arrangement are examined to establish if the individual is working for the business or is providing services on his/her/their own account.

5. Finally, it should be determined whether there is anything in the particular legislative regime under consideration that requires the court to adjust or supplement any of the foregoing.

If the answer to any of the first three questions set out above are “No”, a contract of employment is not deemed to exist and the individual should not be treated as an employee.

If, however, the answer to the first three questions is “Yes”, then questions 4 and 5 of the framework must be considered to determine if a contract of employment exists.

The Guidelines also include nineteen practical examples which demonstrate the application of the five step framework to assist in determining how workers, in a number of different situations, will be taxed.

Conclusion:

• If required by Revenue, taxpayers must be able to demonstrate, using the five step framework, how they determined that a worker should be treated as self-employed rather than as an employee with payroll taxes deducted at source by their employer.

• If a business previously treated a worker as self-employed rather than as an employee, but having reviewed the five-step framework it would appear that this individual is in fact an employee for tax purposes, the business must immediately rectify the situation by operating payroll taxes.

• If the business has incorrectly treated the worker as a self-employed contractor rather than as an employee, the Revenue Commissioners may seek the repayment of uncollected payroll taxes, Employer’s PRSI as well as interest and penalties.

• It is advised that businesses carry out an urgent and comprehensive review of the five step framework to determine employment status of their workers.

Practical Issues

For Tax Advisors and Accountants, the most significant difference is the requirement on an employer to pay employer’s PRSI in respect of payments to employees, currently at the rate of 11.05%  on weekly salaries over €441 or 8.8% if the weekly remuneration is below €441 per week.

Class A is applicable to most private sector employees with payroll taxes deducted at source:

• The Employer Rate is 11.05%
• The Employee rate is 4%
• The 8.8% Employer PRSI applies to class A employees with weekly earnings up to €441. Employees
• Employee PRSI does not apply for employees with weekly earnings of €352 or less.

Class S is applicable to Self-employed individuals:

• A 4% PRSI rate is payable on all income.
• The minimum annual PRSI contribution is €500.
• PRSI is not due and payable if the annual income is less than €5,000.

The tax implications are not the only issues that should be focused upon.  Employee rights must also be considered by Employers.  These include:

1. Minimum wage
2. Unfair dismissals.
3. Equality legislation.
4. Holiday and Sickness payments.
5. Working Hours.
6. Redundancy.
7. Contracts
8. Other Entitlements.

If you require any assistance, please contact us.

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.

Employee Share Awards. Personal Tax. Income Tax. Global Mobility. Payroll. RTSO

From 1^st January 2024 employers will be required to report, collect and remit Income Tax, USC and PRSI, under the PAYE system, on any gains arising on the exercise, assignment or release of unapproved share options by employees and/or directors.  From 1^st January 2024, the tax collection method for share option gains will become a real-time payroll withholding obligation for the employer instead of the individual self-assessment system known as the Relevant Tax on Share Options (RTSO) system.

These new rules are a welcome development for employees and directors who, from 1^st January 2024, will no longer be responsible for filing and submitting Income Tax, USC and PRSI arising on the exercise of their share options.

Employees may still, however, be required to file an Income Tax Return for a relevant tax year, if that individual remains a “chargeable person.”

The due date for such returns is 31st March 2024 and there are different returns required depending on the type of share scheme operated / share remuneration provided.

Penalties for failure to file Returns may apply.

The following Forms are required for the following share schemes:

1. Form RSS1 for share options and any other rights to acquire shares or assets awarded to employees and Directors. https://www.revenue.ie/en/employing-people/documents/form-rss1.xlsm

2. Form KEEP1 – Key Employee Engagement Programme (KEEP) – Details of qualifying share options granted. https://www.revenue.ie/en/employing-people/documents/form-keep1.xlsm

3. Form ESOT1 – Employee Share Ownership Trust (ESOT) – Details of approved Employee Share Ownership Trust (ESOT) schemes. https://www.revenue.ie/en/employing-people/documents/form-esot1.pdf

4. Form ESS1 for details of Approved Profit Sharing (APSS) schemes. https://www.revenue.ie/en/employing-people/documents/form-ess1.xlsm

5. Form SRS01 for details of Save As You Earn Schemes (SAYE) https://www.revenue.ie/en/employing-people/documents/form-srso1.pdf

6. Form ESA – Restricted Stock Units (RSUs), Discounted / Free / Matching Shares, Employee Share Purchase Plans (ESPP), Restricted Shares, Convertible Shares, Forfeitable Shares, Phantom Shares, Stock Appreciation Rights, Growth/Hurdle/Flowering Shares and other Shares. https://www.revenue.ie/en/employing-people/documents/form-esa.xlsm

In circumstances where employers have globally mobile employees working outside Ireland for part of the year, the gains arising on the exercise of the stock option may need to be apportioned based on the number of days those employees worked in Ireland during the grant to vest period.  Employers will need to monitor the Irish workdays for these employees throughout the entire vesting period of the options.  Employers will also need to determine whether the stock option gain is exempt from PRSI.

Consideration must be given as to how the tax liabilities will be funded, especially in situations where there is insufficient income to cover the payroll taxes, where the globally mobile employee is not subject to Irish tax at the date of exercise but a portion of the gain has given rise to an Irish tax liability or where the employee or director has ceased their employment with the organisation. For example, by introducing a “sell to cover” mechanism.

In Summary:

• The RTSO system will be abolished with effect from 1^st January 2024.

• From 1^st January 2024, taxes arising on stock option gains will be collected through the payroll system.

• Currently there are no proposed changes that affect the obligation to file an annual RSS1 informational return by the employer. Therefore, the reporting obligations for share options by employers remain due on or before 31^st March of the following tax year.

• Share Option gains realised before 31^st December 2023 will be liable to tax under the self-assessment system with the employee being responsible for filing a Form RTSO1 along with the relevant tax payment within 30 days of the date of exercise.

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.

Personal Tax, Business Taxes, Capital Gains Tax, VAT. Corporation Tax

Today, 10th October 2023, the Minister for Finance, Michael McGrath and Minister for Public Expenditure, NDP Delivery and Reform, Paschal Donohoe presented the 2024 Budget.  This article will summarise the main points under Personal Tax, Business/Corporation Tax, VAT, Capital Gains Tax (CGT), Property Taxes, etc.

Budget 2024 tax measures feature a range of supports for individual and business taxpayers under the following headings:

PERSONAL TAX

• All PRSI contribution rates will increase by 0.1% from 1st October 2024. There will be an increase of 0.1% in Employee and Employer’s PRSI contributions from 1st October 2024. Class A1 Employee PRSI will rise from 4% to 4.1%.  Employer’s PRSI will rise from 11.05% to 11.15% and the reduced rate of Employer’s PRSI for earnings of €441 per week or less will rise from 8.8% to 8.9%.

• The standard rate band for Income Tax (i.e. the amount of income subject to tax at the 20% rate) will be increased by €2,000, meaning that the first €42,000 of a single individual’s income and the first €51,000 for married couples, with one earner, will be taxed at the 20% Income Tax rate.

• The ceiling for the 2% USC rate will be increased from €22,920 to €25,760. The 4.5% rate of USC will be reduced to 4% and the reduced rate of 2% USC currently applying to full medical card holders as well as those individuals aged over seventy, whose total income does not exceed €60,000, will be extended to the end of 2025.

• The Personal Tax Credit, the Employee Tax Credit and the Earned Income Tax Credit will each be increased from €1,775 to €1,875 for the tax year 2024 onwards.

• The Home Carer tax credit will be Increased by €100, from €1,700 to €1,800.

• The Single person child Carer tax credit will be increased from €1,650 to €1,750.

• The Incapacitated Child Tax credit will be increased from €3,300 to €3,500.

• The Sea-going Naval Personnel Tax Credit has been extended for a further year to 31st  December 2024.

• The Rental Tax credit for principal private residence has been increased from €500 to €750 per year for 2024 or from €1,000 to €1,500 per jointly assessed couple (i.e. married couples or civil partners). Parents who pay for their student children in Rent-a-Room or digs accommodation can now claim relief for rent paid. This change has been backdated and will apply retrospectively to the years 2022 and 2023.  In order to qualify for this tax credit, the children must attend an approved course.

• A temporary one year tax credit in relation to mortgage interest has been introduced for 2024.  It will apply at the standard Income Tax rate of 20%, subject to a maximum tax credit of €1,250 per property, on an outstanding mortgage balance on the taxpayer’s Principal Private Residence of between €80,000 and €500,000, as of 31^st December 2022.  To claim the tax credit, the taxpayer must be compliant with Local Property Tax requirements and file a Tax Return.  The tax credit will be available for offset against the taxpayer’s Income Tax liability for the 2023 year of assessment.  Prorating of the relief will apply where the interest paid is less than twelve months.

• The Company car Benefit-in-Kind relief introduced in Finance Act 2019 to apply from 1^st January 2023 have been extended to 2024.  With effect from 1st January 2023, BIK on employer provided cars is calculated based the vehicle’s CO2 emissions.  The amount liable to tax as BIK is determined by (a) the original market value of the car, (b) the annual business kilometres driven and (c) the CO2 emission rate of the vehicle.  In March 2023, a temporary change was introduced to combat the negative impact of this new BIK rule on the employee’s net or take-home pay.  It provided for a reduction of €10,000 to the original market value of vehicles in categories A to D.  There is no reduction to Open Market Values for cars in the E category.  In addition, the highest business mileage band was reduced from 52,001 Kms to 48,001 Kms as part of that amendment.  These temporary universal measures have been extended to 31^st  December 2024.

• The Temporary Universal Relief of €10,000 applied to the Original Market Value of a company car, including vans, for vehicles in Category A-D is being extended to 31^st December 2024.

• The special Benefit-in-Kind rule on Electric Vehicles is being enhanced and extended. The current Original Market Value deduction of €35,000 will be extended until 31^st December 2025. Along with the additional €10,000 introduced in Budget 2024, Electric Vehicles will see a deduction of up to €45,000 on the open market value.  The tapering of this discount will, therefore, be deferred by two years.  In summary, the current reduction of €35,000 in OMV will continue to apply for all EVs until the end of 2025, and will taper to €20,000 for 2026 and €10,000 for 2027.

• The Department of Finance will be launching a public consultation on modernising share based remuneration.

• It was confirmed that EU State aid approval to deliver the Finance Act 2022 amendments to the Key Employee Engagement Programme (KEEP) has been received and will be commenced by Ministerial order shortly. This will include an extension of the scheme until 31^st December 2025 as well as doubling the lifetime company limit for KEEP shares to €6 million.  It will also enable the Capital Gains Tax treatment to apply to the buy back of KEEP shares by the company from a relevant employee, provided all the conditions are met.

BUSINESS TAX

• In his Budget 2024 Statement, Minister McGrath reaffirmed Ireland’s commitment to the OECD’s Two Pillar Agreement to address the tax challenges arising from the digitalisation of the economy. The legislation to implement the 15% minimum tax rate under the OECD’s Pillar Two agreement will be published in the Finance Bill next week.  Under the BEPS 2.0 initiative, these rules require EU Member States to introduce a global minimum effective tax rate (ETR) of 15% for corporate/multinational groups with annual global turnover of in excess of €750 million. This minimum corporate tax rate will apply in each jurisdiction in which the group operates.  The ETR will be calculated on adjusted financial accounting profits less tax expenses.

• Minister McGrath also reaffirmed his commitment to introducing a participation exemption for foreign sourced dividends in Finance Bill 2024.

• In his speech, the Minister confirmed that the R&D Tax Credit will be increased from 25% to 30% in respect of qualifying expenditure incurred in 2024. The first claims will be filed in 2025. There is a payment limit on the amount that can be paid to a claimant in the initial year of a claim. The Minister announced an increase in the payment threshold from €25,000 to €50,000 thereby doubling the amount of the R&D Tax Credit available for refund to the company, as part of its first year R&D Tax credit instalment.

• The Accelerated Capital Allowances Scheme for Energy Efficient Equipment, which is available to companies and unincorporated businesses, will be extended for a further two years until 31^st December 2025. The scheme allows for 100% Accelerated Capital Allowances to be claimed in year one, on capital expenditure on certain energy efficient equipment, used for the purposes of its trade, provided the qualifying conditions are met.

• As you may remember Finance Act 2022 extended film relief to 31^st December 2028. The Section 481 Film Corporation Tax Credit is a corporation tax credit of 32% of the qualifying costs of certain audiovisual productions. Budget 2024 increased in the current project cap for the film credit from €70 million to €125 million.  This is subject to EU State Aid approval.

• Employment Investment Incentive Scheme (EIIS) provides Income Tax Relief for investment in qualifying small and medium sized businesses, provided qualifying conditions are satisfied. Budget 2024 standardised the minimum holding period required to obtain relief to 4 years and it doubled the limit on the amount on which an investor can claim such relief to €500,000.  It is expected that further changes to EIIS will be made in the Finance Bill to take into account amendments to the EU General Block Exemption Regulation (GBER).

• Capital Gains Tax Retirement Relief applies on the disposal of business assets, farming assets and/or shares in certain family companies by an individual, aged fifty five years or over, provided certain qualifying conditions are met. A reduced Capital Gains Tax Relief is available where the individual is aged sixty six years and over. From 1st January 2025, that upper age limit for Capital Gains Tax Retirement Relief is to be extended to the age of seventy years.  In summary, the reduced relief which is available on disposals from age 66 onwards will now apply from age 70. There will also be a new limit of €10 million on the relief available for disposals to a child up until the age of 70 provided all the qualifying conditions are satisfied.

• No changes to Revised Entrepreneur Relief were announced in the Budget.

• A targeted new capital gains tax relief for individual angel investors in innovative start-ups, in line with the recommendation from the Commission on Taxation and Welfare, was announced today. The relief will be available to an individual who invests in an innovative start-up small and medium enterprise for a period of at least 3 years.  The investment by the individual must be in the form of fully paid-up newly issued shares costing at least €10,000 and constituting between 5 percent and 49 percent of the ordinary issued share capital of the company.  This relief will consist of a 16% rate of Capital Gains Tax (18% if invested through a partnership) on the disposal of qualifying investments, capped at twice the level of investment.  In other words, the gain to which this reduced CGT rate can apply is capped at 200% of the investment made.  Any gain above that will be liable to CGT at the standard rate of 33%. A lifetime gains limit of €3m will apply.   Further details will be available in the upcoming Finance Bill.  The scheme will include a certification process, carried out by Enterprise Ireland, to ensure the relief is targeted at innovative SMEs that can demonstrate financial viability and compliance with the requirements of the EU General Block Exemption Regulation (GBER).

PROPERTY

• As you’re aware, Finance Act 2022 introduced a Vacant Homes Tax which applies to residential properties which are in use as a dwelling for less than thirty days in a twelve-month chargeable period. With effect from 1^st November 2023, the rate will increase from three to five times a property’s existing base Local Property Tax liability.

• The Minister announced a one year extension to the liability date for Residential Zoned Land Tax (RZLT) to facilitate engagement with the mapping process by affected landowners. RZLT was previously intended to be charged and levied from 1^st February 2024 onwards. This has been deferred and will now apply from 1^st February 2025.

• A new temporary tax relief for small landlords will apply from 2024 to 2027. This Rented Residential Relief will provide relief at the standard rate of tax on a portion of the landlord’s rental income from residential properties.  Subject to certain conditions, €3,000 will be disregarded at the standard rate of tax in 2024.  The new relief will rise to €4,000 in 2025 and €5,000 in 2026 and 2027.  This will be equivalent to a tax credit of €600 in 2024, €800 in 2025 and €1,000 in 2026 and 2027.  The relief will be clawed back if the landlord removes the property from the rental market within four years of the initial claim.  To avail of the relief, the tenancies must be registered with the Residential Tenancies Board or with the public authority, where relevant.  In situations where the landlord owns multiple properties, the relief will be apportioned.  Where the property is jointly owned, the relief will be divided based on the percentage to which each owner is entitled.  Further information will be provided in the Finance Bill.

• The Help-to-Buy Scheme is being extended until 31^st December 2025. The relief takes the form of a repayment of Income Tax paid for the four years of assessment prior to making the application.  The scheme will be amended to make it more accessible to those purchasing properties through the Local Authority Affordable Purchase Scheme.  The affordable dwelling contribution received under the LAAP scheme can be used for the purpose of computing the 70% loan to value requirement of the Help to Buy Scheme.  This change will be implemented tomorrow, 11^th October 2023.

• The Defective Concrete Products Levy is being amended so that it will no longer apply to the pouring of concrete used to manufacture precast concrete products. A refund scheme will be introduced for those who paid the levy between 1^st September and 31^st December 2023.

AGRICULTURE

• The flat rate VAT compensation rate for unregistered farmers will be reduced from 5% to 4.8% from 1^st January 2024. This is a measure introduced to compensate unregistered farmers for the VAT they cannot claim on their farming purchases.

• Consanguinity Relief (Stamp Duty) will be extended for a further five years to 31^st December 2028. This reduced Stamp Duty rate of 1% applies to transfers of farmland between certain blood relatives.

• The scheme of accelerated capital allowances, at 50% per annum over two years, for capital expenditure incurred by farmers on certain farm safety equipment will be extended for a further three years, to 31^st December 2026. The expenditure must be certified by the Minister for Agriculture, Food and the Marine.

• The Minister announced that the Income Tax Relief for leased land will be amended so that it only applies to land which has been owned for seven years. Currently, no ownership period condition exists for the relief to apply. This amendment is targeted at active farmers and will apply to lessors who acquire farmland from 1^st January 2024. The change will require a lessor who purchases the farmland for market value on/after 1^st January 2024 to have owned the land for a minimum of seven years before they are eligible to make a claim for Land Leasing Income Tax Relief.

• From 1^st January 2024, the aggregate lifetime limits have been increased from €70,000 to €100,000 for the following Agricultural Reliefs: Stock Relief for Young Trained Farmers, Relief for Succession Farm Partnerships and Young Trained Farmers’ Stamp Duty Relief.

• The maximum Stock Relief for Registered Farm Partnerships will be increased from €15,000 to €20,000 for qualifying periods commencing on/after 1^st January 2024.

VAT

• With effect from 1^st January 2024, the current VAT business registration thresholds will increase from €37,500 to €40,000 for services and from €75,000 to €80,000 for goods.

• The 9% VAT rate for gas and electricity has been extended for an additional twelve months until 31^st October 2024. It had been due to end on 31^st October 2023.

• The Minister announced that a public consultation will be launched by the Revenue Commissioners shortly on the modernisation of the VAT invoicing and reporting system. The digitisation of the VAT system is expected to be introduced in line with EU tax digitisation measures.

• From 1^st January 2024, the zero rate of VAT will apply to e-books and audiobooks.

• From 1^st January 2024, the zero rate of VAT will apply to the supply and installation of solar panels in schools.

• From 1^st January 2024, the total annual capped fund for the Charities VAT Compensation Scheme will be double to €10 million.

MISCELLANEOUS

• No changes were announced in relation to the Capital Gains Tax rate, Capital Acquisitions Tax rate or the amount of the Capital Acquisitions Tax thresholds.

• In accordance with the recommendation of the Commission on Taxation and Welfare, foster children will now be able to avail of the Group B Capital Acquisitions Tax lifetime tax free threshold (currently €32,500) based on their relationship to their foster parent. This amendment will be introduced in the Finance Bill.

• The VRT relief for battery Electric Vehicles has been extended for a further two years to 31^st December 2025. This applies to EVs valued up to €50,000.

• The review of the Funds sector is ongoing.

• Tax Relief available to taxpayers who donate items under the Heritage Item Donation Scheme in any one year will be amended to take into account an increase in the aggregate value of such items from €6 million to €8 million. The tax relief available is a credit of 80% of the market value of the heritage item donated.

For further information, please click the link: https://www.gov.ie/en/publication/a93a4-your-guide-to-budget-2024/

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.

Company Directors – Companies Registration Office (CRO) – Company incorporation – B1 Annual Return

The CRO mandatory requirements will mean every registered director must have an identifying number (i.e. PPS number, RBO number or VIN) associated with them on the Companies Registration Office’s system when making certain filings.  The Companies Registration Office (CRO), under Section 35 of The Companies Corporate Enforcement Act (2021), will require Company Directors to provide their personal public service numbers (PPSNs) when filing the following forms. This will be a mandatory requirement from Sunday, 11^th June 2023:

1. Form A1- Company incorporation,
2. Form B1 – Annual return,
3. Form B10 – Change of director and, or in their particulars,
4. Form B69 – Notification by the individual that he/she/they has/have ceased to be a director or secretary.

Directors’ PPSNs will be required for validation purposes only.  PPS numbers, RBO numbers and VINs will not be accessible on the public register.

The purpose of the new disclosure requirement is to reduce the risk of identity theft by introducing additional identity validation checks.  This will affect individuals who may, wrongly, hold more than twenty five active directorships under different name variations.

It is important to note that non-compliance will constitute a Category 4 offence.

Please be aware that if the PPS Number does not match the PPS Number held by the Department of Employment and Social Protection, this may result in the submission being rejected.  Therefore, to avoid any discrepancies and delays with filings, Directors should act now to make sure that the information held by the DEASP is consistent with that held by the CRO.  It’s important to keep in mind that CRO rejections could lead to late filing penalties and delays in meeting annual return filing dates.

In circumstances, where a director does not have a PPS Number, but has been issued with an RBO number in connection with filings with the Central Register of Beneficial Ownership, this RBO number can be used for the relevant CRO filings.

In situations where a director does not have either a PPS number or an RBO transaction number, they must apply to the CRO for an “Identified Person Number” by means of a Form VIF i.e. Declaration as to Verification of Identity.

The VIF requires the name, address, date of birth and nationality of the individual. It must be declared as true by the director and verified by a notary.

TO DO

• Directors should check that their personal details are consistent with those on record with the Department of Social Protection.  Where DSP records need to be checked or amended, please be aware that Directors must do so themselves, as filing agents are unable to do so on their behalf

• Directors without a PPSN or RBO number should take steps to obtain a VIN.

In Summary

This Companies Registration Office (CRO) requirement for directors to provide a PPS number is aimed at reducing the risk of identity theft.  This new process allows the CRO to verify the identity of each company director and to ensure that that individual is alive and is a natural person.  This change is intended to improve the accuracy of the information held by the Companies Registration Office.

For further information, please click the link below:

https://www.cro.ie/en-ie/About-CRO/Whats-New/PPSN-FAQ?_cldee=6g_4nKxbwJzYd6gOdHH3WoVFU8RM7T2gir_xOhjUaYHBA2OGEzy3hGo7s18ZbYuP&recipientid=contact-7f5d2b33fbf9e71180fb3863bb358f88-9a94001c46624edb84969e8300fbbb53&esid=6bd3fe70-e006-ee11-8f6e-6045bd905fa8

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 advice.

UK Tax. Corporation Tax. Interest and Penalties on late payments. Instalment Arrangements.

Today, HMRC announced an increase in its interest rates, due to another increase in the Bank of England base rate, from 4.25% to 4.5%.  The new rates will take effect from Monday, 22nd May 2023, for quarterly tax instalment payments.  The aim of the late payment rate is to encourage prompt tax payment by UK Taxpayers and to ensure the system is fair for those individuals who pay their liabilities within deadline.

The new rates will take effect from Wednesday, 31st May 2023, for non-quarterly instalments payments.

Today, HMRC has announced increases to interest charged on both the late payment of tax as well as on tax repayments/refunds.

The two new increased rates of interest are:

• Late Payment Interest which is set at base rate plus 2.5%.  This will increase from 6.75% to 7% on 31st May 2023.
• Repayment Interest which is set at base rate minus 1% with a lower limit of 0.5% (known as the ‘minimum floor’).  This will increase to from 3.25% to 3.5% from 31st May 2023.

IN SUMMARY:

The interest rate on unpaid instalments of Corporation Tax liabilities will increase to 5.5% from 22nd May 2023.

The interest rate for the late payment of other taxes will increase to 7% from 31st May 2023.

The interest rate paid by HMRC on the overpayment of tax will increase to 3.5% on 31st May 2023.

For further information, please click: HMRC late payment interest rates to be revised after Bank of England increases base rate – GOV.UK (www.gov.uk)

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.