In addition to the targeted VAT supports announced under the banner of cost of living and supporting climate action, the VAT registration thresholds will also increase for a second year in a row. The flat rate compensation for farmers who are not registered or required to register for VAT will also increase.  VAT registration thresholds   From 1 January 2025, the VAT registration thresholds will increase from €40,000 for services to €42,500, and from €80,000 to €85,000 for goods. The increases aim to ensure that small businesses remain below these thresholds and do not have to register. The full year cost of the increases is estimated to be €15 million.  Farmer’s flat rate compensation  The flat rate compensation for farmers will increase from 4.8 percent to 5.1 percent from 1 January 2025.  The flat-rate compensation scheme is a special scheme for farmers who are not registered, or required to register, for VAT. The scheme is designed to compensate flat-rate farmers for the VAT they incur on farming costs without having to register for VAT. 

A range of measures to further the transition to an ever “greener” economy were also announced which included the expected €7.50 increase to carbon tax, a reduced VAT rate for heat pumps, and a new benefit in kind exemption for electric vehicle charging facilities.   Carbon tax   The rate per tonne of carbon dioxide emitted for petrol and diesel will increase from €56.00 to €63.50 from 9 October as per the trajectory set out in the Finance Act 2020. This increase will be applied to all other fuels with effect from 1 May 2025.   Emissions based Vehicle Registration Tax (VRT) for Category B Vehicles   An emissions-based approach to VRT for category B commercial vehicles is being introduced. This proposal will introduce a lower 8 percent rate for category B vehicles with CO2 emission of less than 120 grams per kilometre with a view to incentivising uptake of these lower emissions vehicles.  The weight carriage ratio for electric commercial vehicles is also being changed to enable them to qualify for the VRT rate of €200.  VAT rate on the supply and installation of heat pumps  Following amendments in the VAT Directive it is possible to apply a reduced VAT rate on heat pumps meeting specific technical standards. A VAT reduction to 9 percent for heat pumps is proposed from 1 January 2025 to incentivise homeowners to install heat pumps.  Accelerated Capital Allowances: gas and hydrogen vehicles  The Accelerated Capital Allowances scheme for gas and hydrogen-powered vehicles and refuelling equipment provides a tax incentive for companies and unincorporated businesses who invest in such vehicles and equipment for the purposes of their trade. The relief will be extended for a further year, to 31 December 2025, to allow the Department of Transport time to review the climate policy objectives underlying the scheme and to determine its future trajectory.  Benefit In Kind (BIK) treatment of Battery Electric Vehicle home chargers  A BIK exemption is being provided in circumstances where an employer incurs an expense in connection with the provision of a facility for the electric charging of vehicles at the home of a director or employee.  Emission thresholds for vehicle capital allowances  The CO2 thresholds for claiming capital allowances on business cars are being adjusted downward in light of improved vehicle emissions standards.   From 1 January 2027, an expenditure of €24,000 will be allowable for cars with CO2 emissions of 0-120g/km. A reduced amount of €12,000 will be allowable for vehicles with CO2 emissions of 121-140g/km. There will be no allowable expenditure for vehicles with emissions >141g/km. 

The announcements featured a range of supports in recognition of the importance of agriculture and the agri-food sector in the economy.   Accelerated Capital Allowances: Farm Safety Equipment  Accelerated capital allowances for expenditure incurred by farmers on certain farm safety equipment, and adaptive equipment for farmers with disabilities are available at 50 percent per annum over two years for eligible equipment.   Under Budget 2025, this measure is being broadened to allow for relief in respect of expenditure by famers on certain Targeted Agriculture Modernisation Schemes (TAMS).   Stock Reliefs   Stock reliefs are given as a deduction from trading income and are available in respect of the computation of farming profits. Subject to meeting certain conditions, a person carrying on the trade of farming is entitled to a stock relief deduction for an accounting period in which there is an increase in the value of the trading stock of the farming trade over the accounting period.   The following three stock reliefs, which were due to expire on 31 December 2024, are now being extended for a further three years to 31 December 2027:   General Stock Relief,   Young Trained Farmer Stock Relief, and   Stock Relief for Registered Farm Partnerships.