HMRC’s latest schedule of live and recorded webinars is now available for booking. Spaces are limited, so take a look now and save your place. A webinar is also being held on the VAT reverse charge for the construction sector, which will take place at 1.45pm on Tuesday 14 November. Businesses can sign up here. HMRC has also sent an email setting out details of a National Minimum Wage webinar.

In this week’s EU exit corner, we bring you the latest guidance updates and publications relevant to EU exit. The latest Trader Support Service bulletin is also available and HMRC has also launched an enhancement to the advanced valuation ruling service which is now available to all traders. Advance valuation ruling service update Previously, agents who represented traders who were not able to use a business tax account could not avail of HMRC’s advance valuation ruling service as this was only accessible through the business tax account. This has now been made possible. HMRC’s advanced valuation rule service intends to provide traders and agents with legal certainty on the valuation method for imported goods, for a period of three years. The service has been operating since April 2023. Miscellaneous updated guidance etc. The following updated guidance, and publications relevant to EU exit are available:- Notices made under the Customs (Northern Ireland) (EU Exit) Regulations 2023; Notices made under the Customs (Northern Ireland) (EU Exit) Regulations 2020; Data Element 2/3: Document and Other Reference Codes: Licence Types – Imports and Exports of the Customs Declaration Service (CDS); Data Element 2/3 Documents and Other Reference Codes (National) of the Customs Declaration Service (CDS); Making an entry summary declaration; Appendix 2: DE 1/11: Additional Procedure Codes of the Customs Declaration Service (CDS); Authorisation type codes for Data Element 3/39 of the Customs Declaration Service; Data Element 2/3: Documents and Other Reference Codes (Union) of the Customs Declaration Service; Apply for an Advance Valuation Ruling; and Additional Information (AI) Statement Codes for Data Element 2/2 of the Customs Declaration Service (CDS).

This week we bring you news about a recent issue with student loan deductions and payrolled benefits in kind (“BIKs”) and HMRC is promoting the use of the ‘Pay by Bank Account’ service which is available from online filing services. Probate queries are now handled by the Courts and Tribunal Service instead of HMRC and a new toolkit is now available to help agents and advisers assess if a taxable remittance to the UK has been made. And finally, HMRC has issued a reminder email about recent changes to the UK’s research and development tax relief regimes, including the new claim notification form and the additional information form which must be used. And HMRC has also asked us to share with you an email on the McCloud Digital Service Launch and changes to the Agent Dedicated Line. Issue with student loan deductions and payrolled BIKs  HMRC has recently identified that a small number of student loan borrowers have been overcharged student loan repayments on their Self-Assessment (“SA”) tax return. The issue has arisen because HMRC calculates student loan repayments using the total PAYE income declared on the SA return. However, student loan deductions are not due on payrolled BIKs that are not subject to Class 1 NIC. Information is contained in Agent Update 112 on the steps HMRC is undertaking to correct this. In addition, guidance on the steps to take when completing the next SA return to prevent a reoccurrence of this issue are also available.  Paying HMRC using open banking – enhancement HMRC has asked us to highlight its ‘Pay by Bank Account’ service (which makes use of opening banking technology) which is available from online filing services and which has recently been enhanced with further enhancements due to be launched soon. Previously the only option was to make an immediate payment to HMRC which sometimes made this unattractive for taxpayers filing their return in advance of the due date for payment of the relevant tax.   HMRC has recently enhanced the service to make it possible to schedule payment for a future date (which cannot be beyond the due date for payment). This feature is now live for the following taxes: VAT; PAYE; PAYE settlement agreement; PAYE late payment or filing penalty; and Class 1A NIC. HMRC also intends the service to be available soon for: Capital gains tax; Self-assessment; Simple assessment; Corporation tax; VAT one stop shop; the soft drinks industry levy; and the plastic packaging tax. Changes to probate phone lines  From Monday 2 October, HMRC is no longer offering a dedicated probate phone line. If a person has a probate query, they should contact the HM Courts and Tribunals Service probate phone line. If a person has an inheritance tax query, they should contact HMRC. 

In its response to the Tax incentives for occupational health: Consultation, the Northern Ireland Tax Committee recommends that a significant increase be made to the current £500 benefit in kind (“BIK”) exemption limit for occupational health. In addition, the UK Government should also consider a BIK exemption for private medical insurance, where there is a link to returning to work. This would be of particular benefit in Northern Ireland where NHS waiting lists are longer than the rest of the UK. An overall review of UK employment taxes policy and a number of recommendations also feature to reduce the cost of employment. Read the key recommendations in the Committee’s submission on page 10.

31 October 2023 is the self-assessment paper filing deadline for 2022/23 to avoid penalties. Readers are reminded that if an online self-assessment return cannot be filed by virtue of one of the online filing exclusions or special cases (search GOV.UK for details as these regularly change) meaning the return must be filed on paper instead, then in those cases, the 2022/23 paper filing deadline is extended to 31 January 2023. A reasonable excuse claim should accompany such returns.

At the recent meeting of the FTA, which brought together tax commissioners and delegates from around the world, representatives agreed on new areas of collaboration to transform the future of tax administration. The three areas identified were the vision of Tax Administration 3.0, effective implementation of the Two-Pillar Solution, and enhancing global capacity building efforts.

A new report published by the OECD reflects on the importance of the international tax agenda for African economies. The report was commissioned at the request of the G7 president, Japan, to inform discussions at the G7-Africa Ministerial Roundtable held in October.

The OECD has published a new convention on implementing Amount A of Pillar One. Amount A of Pillar One sets out rules for the reallocation of profits of the largest and most profitable multinationals to countries regardless of their physical presence. As such, it is seen as a key measure in bringing international tax policy into the modern era. The OECD has forecasted that the proposals could produce global annual tax revenue gains of as much as €32 billion with the greatest gains flowing to low and middle-income countries.

The role of performance measurement and control in prisons in the UK and Ireland continues to evolve, write Mariannunziata Liguori and Martin Kelly The prison sector in the United Kingdom (UK) and the Republic of Ireland (ROI) is significant and forms the backbone of the criminal justice system in both jurisdictions. In 2021, approximately £5.4 billion was spent on the prison system in the UK, where His Majesty’s Prison and Probation Service (HMPPS), an executive agency of the Ministry of Justice (MoJ), is responsible for 117 prisons in England and Wales, including 104 public prisons and 13 private. Three private sector companies – G4S, Sodexo and Serco – manage the private prisons with a combined operational capacity of 16,000 places. As of March 2021, there were 78,058 prisoners overall. In ROI, the annual budget for the Irish Prison Service (IPS) for that year was €395 million, for an average of 3,792 prisoners. The IPS operates as an office of the Department of Justice (DoJ). There are currently 12 prison sites in the Irish prison estate, none run privately. We have recently conducted research exploring the relationships among key stakeholders and performance management tools involved in the provision of prison services in both the UK and ROI. Key stakeholders In the UK, specifically in England and Wales, within HMPPS, the Prison Group Directors are responsible for the operational delivery and strategic development of up to seven prisons at a time. To manage the contracts with private providers, moreover, there is a Head of Custodial Contracts for HMPPS, who ensures that the private contractors deliver to the expected standards.  At the local level, prison governors are expected to provide vision and strategic direction for prisons, ensuring that their site is secure and operationally stable, while maintaining decency and compliance with key performance metrics and targets. In the ROI, the governor in charge of each prison is accountable to the Minister for Justice, through the Director General of IPS, for the safe and secure custody, care and rehabilitation of the prisoners in their care. The governor is also responsible for effective corporate governance at prison level and for cost-effective performance against agreed plans. The research highlighted that, in the ROI, key stakeholders (DoJ, IPS and governors) considered a strong and clear governance system as essential. IPS and governors were perceived as the main actors through whom all decisions and changes had to pass and be approved. A main underlying factor emerging in the provision of prison services was the ability to manage relationships across the wide range of stakeholders and levels involved. Such relationships were influenced by both human agents’ behaviours/attitudes and contextual/physical factors (such as regulation, changes in control and performance measurement systems, availability of resources, contractual aspects, etc.). When compared with the UK, a greater emphasis on softer control and measurement aspects, such as social and human conditions, as well as Health and Safety, became apparent in the ROI. Within the UK, on the contrary, key stakeholders (MoJ, HMPPS, governors and contractors) emphasised contract management issues as being critical to the delivery of services. In both jurisdictions, the role of, and relationships between, the governors and HMPPS/IPS were of critical importance. The empirical evidence suggested the need for greater clarity on their respective roles and responsibilities. The contention for increased efficiency and transparency has led, over time, to a proliferation of new control and performance measurement tools, with an excessive emphasis on standardised and quantified performance measures. If care is not taken, this could lead to a diminution of accountability by narrowing the focus of management on a few numbers, rather than the overall quality of the service provision. Performance measurement and control The research showed that, compared with the ROI, the UK stakeholders at all levels were more wedded to business-like approaches, stressing the importance of efficient and cost-effective prisons and good contracts to manage their services. In both jurisdictions, and regardless of their public/private nature, prisons mainly replicated external mandatory controls and measures. However, there was also an acknowledgement of the unifying role played by accounting and measurement practices and the benefits that common standards and professionalism could bring when new knowledge and techniques are integrated into existing systems. In 2018, a new performance framework, the Prison Performance Tool (PPT), was introduced in the UK to monitor the performance of prisons. Similar in principle to the Balanced Scorecard, the PPT uses a data-driven assessment of performance in each prison to derive overall prison performance ratings. Data for the various measures in the PPT, along with overall prison ratings, are released at the end of each year on GOV.UK, as part of the Prison Performance Ratings publication. These ratings are publicly available and form the basis of a league table of prison performance. The PPT performance measures are weighted according to HMPPS’s priorities. For example, in 2019/20 there was an emphasis on safety and drug levels, living conditions and risk management, as well as security measures and data quality. In ROI prisons, more integrated and comprehensive performance-measurement systems are currently being developed with the aim of strengthening governance and accountability, improving the prisoner’s journey and the safety and security of prisons. IPS has recently introduced a new operating model to align functional responsibilities between directorates and the various operational sites (including prisons) and to provide clarity on decision-making authority and accountability. The Oversight Agreement 2022–24 sets out the key governance and reporting arrangements. Consistently, IPS is required to develop a multi-year Strategic Plan. This defines the mission, vision and values of the service and is expected to incorporate appropriate objectives and goals along with relevant indicators and targets against which performance can be measured. At present, only a limited number of performance metrics are produced and made publicly available. Moreover, such quantitative performance data are limited in scope. For instance, there is no breakdown of figures for each prison, so it is difficult to see which are performing well, or otherwise, against the relevant targets. While key stakeholders in both the UK and ROI indicated that many of the performance measures in place were relevant, governors frequently pointed out that prisons were not sufficiently resourced to achieve some of the targets set, which ultimately affected the prisoners’ experience. It was concerning, in particular, that there was still relatively limited information, in the public domain, in relation to health and education in prisons. With reference to private prisons in the UK, moreover, the role of the public sector controller was identified as being particularly critical. The controller is the MoJ’s on-site representative in each private prison and effectively monitors performance on the ground. Private prisons’ performance is measured through the same system public sector prisons are subject to. In addition to this, however, each contract also has specific contract-delivery indicators (CDIs) built into it with financial incentives. If a private prison operator does not meet its target for a CDI, it may incur a financial penalty. Contracts between private prison providers and the MoJ are highly complex. The contracts are normally an extensive suite of documents comprising the main contract and up to 30 detailed schedules, many with their own constituent parts and appendices. For the 13 private prisons in England and Wales, there was a significant level of compliance and assurance reporting. Private prisons were generally perceived to be under greater control and scrutiny, when compared with their public counterparts, because of the greater contract detail and the presence of public sector controllers within their walls. A potential concern in this area would be the narrow competitive base of the UK prison market and, consequently, the MoJ and HMPPS’s continued reliance on the same few contractors, even when there is evidence of inadequate performance levels.   Conclusions The prison system represents a unique context in which many different stakeholders collaborate. Partnerships are critically important to ensure good performing prisons. Governors in both jurisdictions were conscious of the limitations of performance measurement and that existing indicators did not always reflect their priorities. If the application of performance measurement systems is perceived as inflexible, staff will focus on short-term achievements, paying less attention to the longer-term impacts. The enabling or constraining effect of the systems set in place, and their ability to influence, in one way or another, decisions and behaviours was perceived as being particularly important. If performance is to be effective, an integrated and inter-organisational governance approach becomes essential. Whilst the research highlighted that some excellent work is being carried out in individual prisons in both the UK and ROI, there is still some ambiguity as to how, exactly, this is being effectively captured within the wider performance reporting and control systems of the public sector. In both jurisdictions, there is a clear and increasing desire for consultation and inclusion in decision-making processes. The role of performance measurement and control is evolving and no longer covers only the assessment of organisational results, but increasingly includes managing change, organisational relationships and the external environment. Successful prisons will be those that broaden their view, from looking inward to looking outward towards the community. This article is one of the outputs of a research project by Mariannunziata Liguori (Durham University Business School) and Martin Kelly (Queen’s Management School, Belfast) funded by Chartered Accountants Ireland Educational Trust

In a competitive professional services landscape, visible expertise can be an asset. Mary Cloonan outlines five strategic steps you can take to build trust and stand out in your field In today’s competitive environment, innovative professional services firms prioritise visible expertise to help maximise business development opportunities.  There are a few reasons visible expertise is essential for professional services. First, it’s a way to differentiate your firm from your competition. In a world where firms are constantly vying for attention, being known as an expert in your field sets you apart. Second, it’s a way to build trust with your current and future clients. When you share your ideas and knowledge, you demonstrate confidence in what you do. This confidence transfers to those who see you as an expert, instilling trust in your abilities. Third, it allows you to prioritise market development efforts and resources. By selecting a few key areas, you can focus marketing efforts to maximise returns from minimum investment. And finally, by sharing your ideas and thoughts on a given topic, you are positioning yourself as an authority – someone up to date on the latest trends and changes. To embark on this journey, here are five steps you can take: 1. Claim a segment Select a specific sector or industry segment and focus your efforts on this area. Build your knowledge through reading, attending relevant events, networking and writing about it. Sharing your ideas positions you as an authority. 2. Know your audience Understand your target audience. Identify their pain points and position your visible expertise as the solution. It also helps to tailor your knowledge to the specific needs of your audience. 3. Sharpen your skills You can’t have expertise in anything unless you stay up to date with the latest trends and changes in your industry. By continuously educating yourself, you can position yourself as an authority in your industry. Whether through articles, blog posts, speaking engagements or podcasts, ensure you have the most current information. 4. Create a profile-building plan Plan how you will share your expertise. Determine the best platforms for your content that align with your target audience’s presence. Consider a mix of content types, such as articles, blog posts and videos, to reach a wider audience. 5. Execute the strategy Consistency is key. Execute your plan effectively and keep your target audience in focus. Track your progress by monitoring website traffic and social media engagement. Once you consistently push your expertise to the target market (through articles, videos, social media posts, etc.), adapt your strategy based on the feedback and insights gained along the way. Building visible expertise is a gradual process, but by starting with these five steps, you will be on your way to becoming the top-of-mind choice for your target audience.  Mary Cloonan is the Founder of Marketing Clever

Succession is a multifaceted process that involves financial, emotional and strategic considerations. Mark Butler explores the critical aspects of ensuring the seamless transition of a business from one family member to another Succession decisions in a family-owned business can either fortify its legacy or lead to its downfall.  Having navigated the challenges of Brexit and COVID-19, businesses are now focused on long-term planning and preparing for the unexpected. In family-owned businesses, this includes succession planning, and getting the process right is crucial. Early-stage conversations The foundation of a successful succession plan is open and honest communication. Family members, especially the current owner(s), should initiate conversations about their wishes and intentions for the business’s future early to mitigate misunderstandings and conflicts down the road. By discussing their vision for the business, leaders can set expectations and ensure alignment among family members. The next generation Incorporating the next generation into the business as soon as practical is vital. This not only allows them to learn the ropes but also provides an opportunity to build the necessary skills and experience. Mentorship and on-the-job training can help bridge the generation gap and sustain relationships with suppliers and clients to ensure a smooth transition. Waiting until the last moment to involve successors can be risky, as it may leave them unprepared to take the reins. Owners should give the next generation every chance to learn while they are still there to assist.  Let go and step back One of the most challenging aspects of managing succession is the emotional struggle to let go. Founders and current owners often have a deep emotional attachment to the business they have built over the years. Knowing when to step back and relinquish control can be an emotional wrench. Recognising that this is in the best interests of the business and the family’s future can help to make the transition smoother – but not necessarily easier for many. Structure for business, not tax Structuring the business appropriately can help to ensure its sustainability during and after succession. While planning for tax efficiency is essential, it should not come at the expense of the business’s overall health. Business goals and the company’s best interests should always take precedence over tax planning. Planning first and then executing tax-efficient strategies is more prudent than forcing the business into a tax-efficient mould. Tax benefits, such as retirement relief, can help to minimise the costs of passing on the business, but they are there to help succession, not dictate it. Family shareholder agreements A robust family shareholder agreement is a cornerstone of successful succession planning. This agreement outlines the rights and responsibilities of family members with a stake in the business and addresses issues such as shareholding percentages, decision-making processes, dispute resolution mechanisms and the roles of family members within the company. A well-drafted agreement can prevent conflicts and provide a clear framework for the governance of the business. Fairness vs. equal shareholdings Fairness in succession does not always mean equal shareholdings for all. Each family member may have different skills, interests and levels of involvement in the business. The primary goal should be to ensure the long-term sustainability and prosperity of the business. This may involve distributing shares based on merit, responsibilities and contributions rather than a one-size-fits-all approach. Fairness should be synonymous with the best interests of the business and the family. Secure the business’s legacy Succession planning in a family-owned business is complex and delicate. It requires open communication, early involvement of the next generation, the courage to let go, proper business structuring, family shareholder agreements and a fair distribution of responsibilities and shares. Some business families think their company and family issues are unique. Sometimes, they are correct, but advice from experienced advisors can help to structure a succession journey that starts long before the keys are handed over. Succession should be viewed as an opportunity to secure the company’s legacy and foster growth, not merely as a financial transaction. By prioritising these elements, family businesses can ensure a seamless transition that benefits the enterprise and the family it supports. Mark Butler is Managing Partner at HLB Ireland

Budget 2024 introduced measures for individuals and businesses facing another winter of high costs. Brian Brennan discusses this year’s package and the future-focused benefits of the new State funds The tax package of €1.3 billion introduced under Budget 2024 cast a wide net across Irish society, from income tax breaks for individuals and mortgage interest relief for homeowners to a rental credit increase for tenants, tax relief for landlords and tax reliefs and supports for businesses. The Budget also provided for tax-raising measures, including extending the bank levy to raise €200 million. A substantial tax package The tax packages for Budget 2024 and Budget 2023 were substantially larger than the tax measures introduced in the two previous pandemic Budgets. While substantial budgetary packages are becoming the norm, so are the inflationary challenges facing businesses and individuals. Minister for Finance Michael McGrath had to formulate a tax package at the risk of fuelling inflation balanced against the need to take action to provide respite to households and businesses facing another winter of high energy and living costs. Given Ireland’s exchequer surplus for 2022 and forecasts of short- to medium-term surpluses on the back of strong tax yields, it is difficult to imagine the Government failing to deliver a package of this magnitude. Business measures Companies in Ireland, both multinational and indigenous, will welcome enhancements to the research and development (R&D) tax credit. The rate increase from 25 percent to 30 percent will maintain the net value of the existing credit for businesses subject to the new 15 percent minimum effective tax rate resulting from the Base Erosion and Profit Shifting (BEPS) Pillar Two reform package. SMEs and those companies outside the remit of Pillar Two will benefit from the rate increase. SMEs will also welcome the doubling of the first-year payment threshold from €25,000 to €50,000.  A new capital gains tax relief (CGT) for angel investment in innovative start-ups has the potential to provide alternative funding streams for new businesses. Qualifying investors may avail of an effective reduced rate of CGT of 16 percent – or 18 precent, if through a partnership – on a gain up to twice the value of their initial investment subject to a lifetime limit of €3 million. The details of how the new rate will apply will be set out in the Finance Bill. This is certainly a welcome initiative in supporting enterprises that hopefully avoids being so restrictive as to be of limited practical use. The Employment Investment Incentive and Key Employee Engagement Programme will also be enhanced. Minister McGrath announced the establishment of a dedicated working group focused on simplifying and modernising the administration of business supports. This was in response to feedback that the rules and requirements surrounding tax reliefs and schemes are complex, which can make them difficult to access. Plans for an extensive public information campaign with Revenue to raise awareness of the range of tax credits and reliefs available to PAYE taxpayers were also announced. Regarding revenue-raising measures, Minister for Public Expenditure and Reform Paschal Donohoe  announced an increase of 0.1 percent to all PRSI contribution rates from 1 October 2024. While the Minister described this as a “modest” increase, it paves the way for further increases in the years ahead to fund the pension system for our ageing population. Wise use of resources While tax breaks and supports dominated media coverage of Budget 2024, it is essential to acknowledge the fiscal prudence demonstrated by the Government in plans to establish two new funds to ensure that windfall taxes do not become part of Ireland’s core national spending. The Future Ireland Fund will help fund the healthcare, pension and home care costs of Ireland’s ageing population. It will receive €4 billion on the dissolution of the current National Reserve Fund and 0.8 percent of GDP annually from 2024 to 2035, with the potential to have accumulated €100 billion by 2035. The Infrastructure, Climate and Nature Fund aims to address Ireland’s record of halting capital spending during economic downturns. This fund will also support climate action with €3 billion earmarked for capital projects to help keep Ireland on track to meet carbon budgets. The National Reserve Fund will make a €2 billion contribution in 2024. Additionally, €2 billion will be invested yearly until the Infrastructure, Climate and Nature Fund reaches €14 billion. Future budgets In Budget 2024, the Government is striving to make the best use of the resources available now to alleviate the impact of inflation on households while also sustaining an environment in which businesses can grow. Of course, there is always more a government can do regarding support. However, if Ireland can achieve the funding targets underpinning the two new State funds announced under Budget 2024, the country will be in a good position to respond to unforeseen future events. Brian Brennan is a tax partner at KPMG You can hear more about Budget 2024 on the Accountancy Ireland podcast, available on Spotify, Apple Podcasts and at accountancyireland.ie.

The Institute recently hosted a webinar on Corporate Enforcement Authority – Insolvency. This conversation is with Cathy Shivnan, Director of Insolvency Supervision, at the Corporate Enforcement Authority (CEA) and gives insights into the CEA’s insolvency agenda. The session also included some background on Cathy’s career and her journey from Revenue to CEA along with the evolution of the CEA from the ODCE. The recording can be accessed here.

A new Tax Advisor Liaison Committee (“TALC”) subgroup is to be established by Revenue in the coming weeks which will focus on identifying any opportunities “to simplify and modernise the administration of business supports”, an area the Institute has been lobbying for for many years. In the area of compliance, the Budget 2024 Tax Policy Changes publication confirms that Revenue will conduct a range of targeted compliance management activities in 2024. The Terms of Reference of the new TALC subgroup (which is a meeting of Revenue and representative bodies including the Institute under the auspices of CCAB-I) will be agreed at TALC with a report on the recommendations expected to be delivered during the course of 2024. In respect of the targeted compliance activities in 2024, it is expected that additional Exchequer receipts will arise from increased taxpayer compliance in the areas of eCommerce, payroll and expenses reporting and the cash/shadow economy. In addition, Revenue estimates that €180 million in refunds could potentially be due to taxpayers for 2022 alone. As a result, the Minister announced that an extensive public information campaign will be launched shortly by Revenue in order to raise awareness of the range of tax credits and reliefs available to PAYE taxpayers, in order to ensure people can avail of their full entitlements and receive any refunds that are due.  

Recognising the continuing vital importance of farming across Ireland, a number of agricultural reliefs which were due to cease at the end of 2023 have been extended, including the scheme for accelerated capital allowances on farm safety equipment. The Minister also increased the maximum aggregate lifetime limit of a number of farm-related reliefs to the maximum allowable under the new EU Agricultural Block Exemption Regulation. The VAT flat rate for unregistered farmers is also being reduced. Consanguinity relief (stamp duty) This relief is being extended for a further five years to 31 December 2028. The relief reduces the rate of stamp duty applicable to intra-familial transfers of farmland from 7.5 percent to 1 percent. The Government also published “Review of Consanguinity Relief (2023)” which makes a number of recommendations in relation to the relief, including the five year extension which is to be implemented. Accelerated capital allowances on farm safety equipment This scheme, which provides for accelerated capital allowances of 50 percent per annum in respect of  eligible equipment, and which was due to end on 31 December 2023, is being extended for three years to 31 December 2026. The expenditure must be certified by the Minister for Agriculture, Food and the Marine. Once certified, the expenditure can be written off at a rate of 50 percent per annum over two years rather than at the normal rate of 12.5 percent over eight years. Reliefs for Young Trained Farmers and Succession Farm Partnerships Stock relief for young, trained farmers, relief for succession farm partnerships and young trained farmers stamp duty relief are all being amended to increase the aggregate lifetime amount of relief available to a person under these reliefs from €70,000 to €100,000 from 1 January 2024. Stock Relief (Registered Farm Partnerships) Stock relief for registered farm partnerships is being amended to increase the threshold from €15,000 to €20,000 in the case of qualifying periods commencing on or after 1 January 2024. Flat-rate VAT compensation percentage The Minister announced that the flat-rate compensation percentage of VAT for farmers will be reduced to 4.8 percent (a reduction of 0.2 percent) from 1 January 2024. This scheme compensates unregistered farmers on an overall basis for VAT incurred on their farming inputs. According to the Budget publications, the decrease is based on macro-economic data received for the period 2021-2023.

The main measures announced were the now usual annual Budgetary increases in excise duty for tobacco products, and an extension to the current excise reductions for fuel. There were no increases in alcohol duty. Fuel excise The Minister deferred the final tranche of the various fuel duty excise increases which will now take place in two equal instalments, with the first taking place on 1 April 2024. Therefore the temporary excise rate reductions which apply to diesel, petrol and marked gas oil, and which were due to expire on 31 October 2023, are being extended. 4 cents, 3 cents and 1.7 cents will be added to petrol, diesel and marked gas oil respectively on both 1 April 2024 and 1 August 2024. Tobacco excise Excise duty on tobacco products is being increased by 75 cents, inclusive of VAT, on a pack of 20 cigarettes in the most popular price category. Pro rata increases will apply to other tobacco products. According to the Budget 2024 Financial Resolutions, this change will take effect from midnight tonight. E-cigarettes and vaping   In the context of public health interests, delays to the revision of the EU’s Tobacco Products Tax Directive and the Government’s commitment to tax e-cigarettes and vaping products, the Minister is proposing to introduce a domestic tax on these products in next year’s Budget. According to the Minister, this will involve considerable preparatory work by both the Department for Finance and the Revenue Commissioners in drafting this legislation.

The Minister announced a one-year extension to the reduced VAT rates for gas and electricity, increases in the VAT registration thresholds for both goods and services, and the zero-rating of audiobooks, ebooks, and solar panels for schools. For the hospitality sector, the 13.5 percent VAT rate, which recommenced from 1 September 2023, remains unchanged. The Revenue Commissioners will shortly launch a public consultation examining how digital advances can be used to modernise Ireland’s VAT invoicing and reporting system. Gas and electricity The 9 percent VAT rate for gas and electricity (normally 13.5 percent), which was originally due to end on 31 October 2023, is being extended for an additional 12 months until 31 October 2024. The 9 percent reduced rate first took effect from 1 May 2022. The extension is expected to cost €315 million in 2024. VAT registration thresholds From 1 January 2024, the current VAT registration thresholds are being increased from €37,500 to €40,000 for services, and from €75,000 to €80,000 for goods. According to the Minister’s speech, although the increases are modest, they are targeted at small businesses whose turnover is close to the current thresholds. The increases aim to bring the thresholds broadly in line with forthcoming EU VAT registration thresholds. Audiobooks, ebooks, and solar panels for schools From 1 January 2024, the VAT rate for audiobooks and ebooks will be reduced from 9 percent to zero percent (to bring the rate in line with paper books), at a full year cost of €3 million, according to the Budget 2024 publications. From the same date, the VAT rate for the supply and installation of solar panels installed in schools will also be reduced to zero percent. Charities VAT compensation scheme From 1 January 2024, the total annual capped fund for the Charities VAT compensation scheme is being increased from €5 million to €10 million. The scheme aims to reduce the VAT burden on charities and partially compensate for VAT paid by the charity and applies to VAT paid on expenditure from 1 January 2018.

Measures to further the transition to an ever “greener” economy were also announced. While not a tax related measure, perhaps the most welcome announcement on the climate front is the establishment of the Infrastructure, Climate and Nature Fund. The fund is a response, in the words of the Minister, to “the devastating impact of climate change on communities across the globe”. Microgeneration of electricity Microgeneration of electricity is the small-scale production of electricity by consumers in their own homes. Where excess electricity is produced, this can be sold back to the grid. There is a tax exemption from income tax, USC and PRSI where this energy is produced from renewable, sustainable or alternative sources of energy. The Minister announced an increase in this exemption from €200 to €400. Relief for battery electric vehicles The relief from benefit-in-kind on electric vehicles (EVs) was subject to a tapering of relief in recent Finance Acts. The Minister announced a deferral of this tapering until 2026 with the deduction of €35,000 applying until the end of 2025, €20,000 in 2026 and €10,000 in 2027. In our Pre-Budget 2024 Submission, we called on the Government to introduce measures to stimulate the uptake of EVs by Irish consumers. The VRT relief for battery EVs is being extended for a further two years to the end of 2025. This applies to EVs valued up to €50,000. Carbon tax As expected, carbon tax is set to increase again, in line with commitments to raise the rate of carbon tax to €100 per tonne of carbon dioxide emitted by 2030, as per the trajectory set out in Finance Act 2020. From 11 October 2023, the rate per tonne of carbon dioxide emitted for auto diesel and petrol will increase from €48.50 to €56.00. This increase will apply to all other fuels from 1 May 2024.

This year, key measures for businesses operating in Ireland were announced. The increase in the R&D tax credit to 30 percent as well as a scheme of business supports worth €250 million (of which more detail is to be provided) were welcome. While it may seem like Minister McGrath has made limited announcements on the corporation tax front, legislation implementing the monumental Pillar Two rules will be included in Finance (No. 2) Bill 2023 and will be wide-ranging and complex and will be the most significant changes to Irish tax legislation in the history of the State. Minister McGrath also reaffirmed the Government’s commitment to introducing a participation exemption for foreign sourced dividends. This is part of a territorial system of taxation which the Institute has been calling for in successive Pre-Budget Submissions. This commitment will be most welcomed by Irish businesses. Research and Development (R&D) Tax Credit The R&D Tax Credit remains one of the most successful tax expenditures in Ireland. In 2021, 1,629 companies claimed an R&D Tax Credit totalling €753 million. The R&D Tax Credit is calculated as a percentage of qualifying expenditure. In his speech, Minister McGrath announced an increase in the rate from 25 percent to 30 percent. In addition, there is a payment limit on the amount which can be paid to a claimant in the initial year of a claim. The Minister announced an increase in this threshold from €25,000 to €50,000. In our response to a Government consultation on the R&D Tax Credit in 2022, we recommended the acceleration of the payment of tax credits. We also recommended that the Government activate measures to introduce a 30 percent rate for the credit. Accelerated Capital Allowances – Energy Efficient Equipment The Accelerated Capital Allowances (ACA) scheme for Energy Efficient Equipment (EEE) is being extended for a further two years to 31 December 2025. In our Pre-Budget 2024 Submission, we recommended extending this measure as it is a particularly useful measure in encouraging businesses to choose EEE, where possible. ACAs are net neutral in terms of overall cost to the Exchequer. Section 481 Film Relief Film relief provides for a corporation tax credit for the qualifying costs of certain audiovisual productions. The cap on qualifying expenditure is being increased to €125 million. Employment Investment Incentive (EII) The EII scheme provides for income tax relief for investment in qualifying small and medium sized businesses.  From 1 January 2024, all investments made will be subject to a four-year holding requirement and the limits on investments which qualify for relief is to increase to €500,000. In our Pre-Budget 2024 Submission, we noted that amendments to the EU General Block Exemption Regulation require further updates to the EII scheme. Minister McGrath announced that the necessary amendments will be included in the Finance Bill, once published. Key Employee Engagement Programme (KEEP) The Minister announced that State-Aid approval has been received for the 2022 amendments to the KEEP scheme. The amendments include the extension of the scheme to the end of 2025 and a doubling of limit for the total market value of issued but unexercised qualifying share options from €3 million to €6 million.

Looking beyond headline corporation tax receipts to the health of the corporate sector is key Budget 2024 is a first step towards meaningful support for entrepreneurs Use of tax policy as a lever to encourage landlords to remain in rental market will work for society and the economy   High time for childcare to be recognised as part of critical infrastructure     10 October 2023 – Reacting to today’s Budget speeches, Chartered Accountants Ireland has highlighted the importance of supporting enterprise across the country. The Institute represents over 32,700 members, two-thirds of whom work in business.   Supporting enterprise   Director of Public Affairs, Dr Brian Keegan commented  “A healthy corporate sector is critical to Ireland’s economic growth. Without it, the state simply doesn’t have the tax receipts to effect change across so many areas of the economy and society.    “It’s positive to see the focus switching away from the headline corporation tax receipts and the enterprise sector being singled out and supported. These businesses create significant local employment and deserve the support announced today of a €250 million fund to help meet the increased cost of doing business in 2024.   “We hope that the scheme is introduced in a timely manner as businesses are already grappling with additional costs of statutory sick pay, impending pension auto-enrolment and a significant uplift in the minimum wage to €12.70.”  Supporting entrepreneurism   The Institute has also noted the uplift in the R&D credit from 25% to 30% as well as an enhanced capital gains tax relief for angel investors. It states that these measures send the signal that Ireland is open for business and wants to support entrepreneurism.  Dr Keegan continued  “The R&D tax credit has been hugely successful in encouraging research and innovation and creating employment. New capital gains tax reliefs for angel investors should result in early funding being made available to businesses when they need it most – at inception. There have been few new initiatives for the corporate sector in the past decade, and it was positive today to see recognition of the sector to Ireland’s economy.”   Tackling housing  The lack of adequate, affordable, reasonably located housing for staff is one of the biggest barriers to expansion reported by Chartered Accountants Ireland members. The Institute said that today’s tax break of €600, rising to €1,000 over three years, announced for small, private landlords if they remain in the rental market will help to boost Ireland’s housing supply. Cróna Clohisey, Tax and Public Policy Lead said  “Small landlords are an essential feature of a fully functioning residential property market, and properties owned by these landlords are more likely to be in regional, less densely populated parts of the country, providing much needed rental stock in areas that are not as attractive to institutional investors.  “Today’s announcement for landlords will help stabilise the rental market and give more certainty to tenants but also importantly make it more attractive for a small private landlord to enter the rental market. Combined with an increased rental tax credit, the measures will go some ways to helping people access housing, and it will work for society and the economy.”  Childcare as a critical infrastructure issue   Today’s announcement of an increase in the national childcare subsidy (NCS) from €1.40 to €2.14 as well as extending the NCS to certain childminders will help with the cost of childcare but will not address significant capacity constraints within the market.   Clohisey continued  “The cost of childcare is unaffordable for many working parents and today’s announcement to increase the NCS from September 2024 is welcome. However, a survey of our membership last month shows that in addition to cost, the biggest challenge working parents face is a lack of available childcare places.      “While a commitment was made today to address supply issues through core funding, we are asking government to recognise that childcare provision is part of the critical infrastructure necessary for a functioning economy. The crisis needs to be addressed with a long-term strategy with children at the forefront, that adequately funds the sector, increases capacity, and supports working parents.”    ENDS