Best Tax Accountants Dublin

Increased Cost of Business Grant Scheme – Ireland

 

As part of Budget 2024, the government signed off on a package of €257 million for the Increased Cost of Business (ICOB).  The main aim of this Grant is to support small and medium sized businesses by contributing towards their rising business related costs including energy, labour, rent, etc.

 

 

To Qualify for the ICOB Grant

To qualify for the ICOB grant your business must meet the following conditions:

  • It must be a commercially trading business, currently operating directly from a property that is commercially rateable.
  • It must have been trading on 1st February 2024 and your intention must be to continue trading for at least three months.
  • Your commercial rates bill must be equal to or less than €30,000 for 2023.
  • You must submit confirmation of your bank details to the relevant Local Authority.
  • The business must be considered rates compliant. This includes businesses with phased payment plans in place.
  • It must possess a valid Tax Registration Number.
  • It must be tax compliant.

 

 

The Grant Amount

The ICOB grant is a once-off payment based on the value of the 2023 commercial rates bill.

 

The grant is 50% of the commercial rates bill for eligible businesses with a 2023 bill of less than €10,000.

 

The grant is €5,000 for eligible businesses with a commercial rates bill of between €10,000 and €30,000.

 

Businesses, however, with a commercial rates bill over €30,000 are not eligible to receive this ICOB Grant.

 

Please be aware that Public institutions and financial institutions will not be eligible for the grant, except for Credit Unions and specific post office services.

 

Vacant properties will also not be eligible for the ICOB Grant.

 

 

 

It is important to keep in mind that this ICOB Grant is not a Commercial Rates waiver. Rateable businesses are still required to pay their commercial rates to their local authority.

 

 

Today, the Government issued two important updates concerning the Increase in Grant Scheme (ICOB):

  • They specifically targeted businesses in the Retail and Hospitality sectors. Businesses operating within these sectors are now eligible for a second grant payment which is equivalent to the initial ICOB Grant amount.

 

  • The closing date for eligibility confirmation which was 1st May 2024 has now been re- opened from 15th May to 29th May 2024.

 

 

 

Local Authorities are expected to begin paying out the ICOB Grant to eligible businesses in the coming weeks.

 

 

 

For further information, please follow the links:

 

https://www.mycoco.ie/icob

 

https://www.dlrcoco.ie/sites/default/files/2024-03/ICOB%20User%20Guide.pdf

 

 

 

 

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 – Furnished Holiday Lettings tax regime abolished from 6th April 2025

 

 

The Chancellor of the Exchequer, Jeremy Hunt delivered his UK Spring Budget 2024 today.

 

 

As you are aware, the Furnished Holiday Letting (FHL) regime provides tax relief for property owners letting out furnished properties as short term holiday accommodations.  From 6th April 2025, however, the Chancellor is removing this tax incentive in an attempt to increase the availability of long term rental properties.

 

 

What is a Furnished Holiday Letting (FHL)?

 

According to HMRC’s guidance material, a furnished holiday let is deemed to be a furnished commercial property which is situated in the United Kingdom.

 

It must be available to let for a minimum of 210 days in the year.

 

It must be commercially let as holiday accommodation for a minimum of 105 days in the year.

 

Guests must not occupy the property for 31 days or more, unless, something unforeseen happens such as the holidaymaker has a fall or accident or the flight is delayed.

 

 

 

Currently, FHLs benefit from the following tax advantages:

 

  • There is a full deduction of interest on borrowings from FHL income.

 

  • Currently, profits from furnished holiday lettings are treated as relevant earnings. Therefore, profits generated from FHLs can be treated as earnings for the purposes of making tax advantaged pension contributions.

 

  • Capital Allowances on items such as furniture, fixtures and equipment can be claimed on your Furnished Holiday Let. You can also claim tax relief on certain refurbishment costs.

 

  • On the disposal of the FHL, Business Asset Disposal Relief (10% CGT rate), Business Asset Rollover Relief and Gift Hold-over Relief may apply.

 

  • Provided there is sufficient business activity to demonstrate a trading activity, FHL properties can qualify for Business Property Relief thereby reducing the value of the business for Inheritance Tax purposes by up to 100%.

 

 

 

So, what happens from 6th April 2025?

 

  • Mortgage Interest Relief will be given as a 20% tax credit. This will result in a reduction in tax relief from 40% for higher rate taxpayers and 45% for additional rate taxpayers.

 

  • The normal residential property CGT tax rate of 24% will apply.

 

  • Relief may be available for the replacement of domestic items in line with the regulations for long term lets.

 

  • FHL profits will no longer be treated as relevant earnings for the purposes of making pension contributions.

 

  • Properties will no longer qualify for Business Property Relief, thereby increasing Inheritance Tax liabilities.

 

 

 

What actions can you take?

 

You may wish to consider your options before the rules are abolished in April 2025.

 

 

Options include:

 

  • Continue renting your property as before but without the current tax advantages.

 

  • Sell the property with the aim of benefitting from the 10% CGT rate.

 

  • Gift the property with the aim of benefitting from Business Asset Disposal Relief and Gift Hold-over Relief.

 

  • Change your rental strategy by renting your property on a long term basis.

 

 

 

 

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.

What you need to know about CAT loans from Close Relatives – Mandatory Tax Filing

 

With effect from today, a new mandatory Capital Acquisitions Tax filing obligation is imposed on the recipients of certain loans from close relatives.

 

 

It applies to existing loans as well as new loans made since January 2024, irrespective of whether or not any tax is due.

 

 

Until 31st December 2023, there was no requirement to file a Capital Acquisitions Tax Return in respect of this type of loan, until 80% of the recipient’s group class threshold had been exceeded.

 

 

The aim of this new requirement is to provide the Revenue Commissioners with greater visibility with regard to loans between close relatives in circumstances where the loans are either interest free or are provided for below market interest rates.

 

 

The individual is deemed to have received the benefit on 31st December each year which means the relevant return must be filed on or before 31st October of the following year.  Therefore, the first mandatory filing date will be 31st October 2025.

 

 

What is a “Close Relative”?

 

A close relative of a person, includes persons in the CAT Group A or B thresholds, and is defined as follows:

 

  • a parent of the person,

 

  • the spouse/ civil partner of a parent of the person,

 

  • a lineal ancestor of the person,

 

  • a lineal descendant of the person,

 

  • a brother or sister of the person,

 

  • an aunt or uncle of the person, or

 

  • an aunt or uncle of the spouse/ civil partner of a parent of the person.

 

 

 

What about Loans from Private Companies?

 

There are certain “Look Through” provisions which must be applied to such loans.  In other words, loans made to or by private companies will be “looked through” to determine if the loan is ultimately made by a close relative.  Generally private companies are under the control of five or fewer persons.  The holding of any shares in a private company is sufficient for these provisions to apply, including where the shares in the company are held via a Trust.

 

 

If someone receives an interest free loan of say €500k from a close relative’s company, the recipient of the loan would be deemed to take the loan from their close relative. As this exceeds the €335k threshold, this loan would be reportable.

 

 

These mandatory tax filing obligations apply in the following situations:

 

  1. Where the loan is from a private company to a person in circumstances where the beneficial owner of the company is a close relative of the borrower.

 

  1. Where the loan is from a person to a private company in circumstances where the beneficial owner of the company and the lender are close relatives.

 

  1. Where the loan is from one private company to another private company in circumstances where the beneficial owners of both companies are close relatives.

 

 

 

 

What Loans must be Reported?

 

A mandatory filing obligation arises for the recipient of the loan where:

 

  • there is a loan between close relatives,

 

  • he/she is deemed to have taken an annual gift,

 

  • no interest has been paid on the loan within six months of the end of the calendar year and

 

  • the total balance on the loan and any other such loan exceeds €335,000 on at least one day during the calendar year.

 

 

Whether or not a person exceeds the €335,000 threshold would need to be considered in relation to each calendar year.

 

 

A loan is deemed to be any loan, advance or form of credit. It need not necessarily be in writing.

 

 

All specified loans must be aggregated.  Therefore, if a person has multiple loans from a number of different close relatives, the amount outstanding on each loan, in the relevant period, must be combined to determine if the threshold amount of €335,000 has been exceeded.

 

The first returns must be submitted by 31st October 2025 in respect of the calendar year ending 31 December 2024.

 

 

 

 

What Information must be Reported?

 

The CAT return must include the following information in relation to reportable loan balances:

 

  1. The name, address and tax reference number of the person who made the loan,

 

  1. The balance outstanding on the loan and

 

  1. All other such information as the Revenue Commissioners may reasonably require.

 

 

 

 

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.

TAX CLEARANCE

globe on newspaper2

 

From 21st May 2021 Revenue will recommence their assessment of the tax clearance status of businesses.

 

Please be aware that this may result in the rescinding of the tax clearance status of businesses that are currently in receipt of the EWSS and/or the CRSS.  It is essential to check the status of your tax clearance as your business may becoming ineligible to receive further payments under these schemes until the compliance issues concerned are fully resolved.

 

If Revenue have contacted you to remind you of your requirement to file outstanding returns or to address other compliance issues in order to retain your tax clearance status, please make sure you do so as a matter of urgency.

 

In summary, businesses which are reliant on the EWSS and/or the CRSS should take immediate action by contacting Revenue and addressing the outstanding issues.