Enhancements to the research and development (R&D) tax credit, and start-up relief for companies were the main features. A new corporation tax relief is to be introduced for expenses incurred on an initial stock market listing. And, as expected, the new participation exemption for foreign sourced dividends will commence from 1 January 2025.   R&D tax credit  The R&D tax credit remains an important feature of the corporation tax (CT) system and provides a 30 percent tax credit for qualifying R&D expenditure. The regime’s primary policy objective is to increase business R&D in Ireland, as R&D contributes to higher innovation and productivity. More broadly, the tax credit forms part of Ireland’s CT offering and is aimed at attracting FDI and building an innovation-driven domestic enterprise sector. The credit enables Ireland to remain competitive in attracting quality employment and investment in R&D.  Given its importance, it is proposed to increase the first-year payment threshold from €50,000 to €75,000. This threshold is the amount up to which a claim can be paid in full in the first year, rather than being paid in instalments over three years. The increase should therefore provide valuable cash-flow support to companies undertaking smaller R&D projects or engaging with the credit for the first time.   It is estimated, based on 2022 claims (the latest data available), that increasing the payment threshold to €75,000 will increase, to circa 44 percent, the proportion of claimant companies qualifying for payment of the credit in full in the first year.  Section 486C start up relief  Section 486C start up relief currently provides a CT relief for new small companies in the first five years of trading with an annual CT liability of less than €40,000. Marginal relief is available to Companies with a CT liability of between €40,000 and €60,000 to ensure companies with a liability just over €40,000 do not lose the full value of the relief. Section 486C allows relief of up to €40,000 per year against CT liabilities, which may be carried forward where not fully used in the five years. The relief is currently calculated by reference to employer PRSI paid of up to €5,000 per employee. This does not encompass PRSI paid by owner-directors.   This measure proposes to extend the qualifying criteria to allow up to €1,000 of Class S PRSI per individual to count toward this cap and aims to provide much needed support for small, owner-managed start-up companies.  Participation exemption  As noted earlier, the participation exemption for foreign dividends which will provide for a significant simplification of double tax relief for Irish companies with foreign subsidiaries will commence from 1 January 2025 as expected. Further details of this measure are set out in in Chapter 8 of the Budget 2025 Tax Policy changes publication.   Relief for listing expenses  A new measure is to be introduced which will provide relief for expenses incurred on an initial stock market listing. This measure aims to support businesses in the scale-up phase of their growth and development and should also encourage more stock exchange listings, whilst also providing wider positive benefits for the Irish economy.   The deduction will be available for expenses incurred wholly and exclusively on a first listing (IPO) on a recognised stock exchange in Ireland or the EU/EEA area. The relief will be available to investment companies as an expense of management, or to trading companies as a trading deduction.  An overall cap of €1 million of expenses per listing will apply, with the relief being claimable by a company in the year of first successful listing. Expenses wholly and exclusively incurred for the purposes of the listing, both in the year of listing and the previous three years, will be allowable, subject to the overall €1 million cap. The measure will apply for successful listings completed on or after 1 January 2025.   

To further combat the ongoing pressures on household budgets, the Minister for Finance announced the expected €2,000 increase in the standard rate cut off band for all taxpayers, in addition to a range of increases in various tax credits. The middle rate of USC will be reduced from 4 percent to 3 percent. The now usual change in the USC bands to ensure that the increased minimum wage remains outside the middle rate of the USC also featured. These changes will take effect from 1 January 2025.   Changes to the small benefit exemption, an issue on which the Institute has extensively lobbied on, also featured with the value limit to increase to €1,500 and the number of benefits that an employer can give to increase from two to five per year.   Rate bands and tax credits changes from 1 January 2025  The income tax standard rate cut off bands will increase as follows:   Single, widowed or surviving civil partner from €42,000 to €44,000,  Single, widowed or surviving civil partners, qualifying for the Single Person Child Carer Credit from €46,000 to €48,000,  Married couples or civil partners (one income) from €51,000 to €53,000, and  Married couples or civil partners (two incomes) from €51,000 to €53,000 (with a maximum increase of €35,000).  The personal tax credit, employee tax credit, and earned income tax credit will all increase from €1,875 to €2,000.   The home carer tax credit will increase from €1,800 to €1,950  The single person child carer credit will increase from €1,750 to €1,900.   The incapacitated child tax credit will increase by €300 from €3,500 to €3,800   The blind persons tax credit will increase by €300 from €1,650 to €1,950.   The dependant relative tax credit is to increase €60 from €245 to €305.  The estimated total cost of these measures is €1.12 billion in the first year and €1.29 billion on a full year basis.  USC  The 4 percent rate of USC will reduce to 3 percent. To ensure that the salary of a full-time worker on the minimum wage will remain outside the new 3 percent rate of USC when the minimum wage increases from €12.70 to €13.50 from 1 January 2025, the ceiling of the 2 percent USC rate band will increase by €1,622 from €25,760 to €27,382.    As a result, the USC rates and bands from 1 January 2025 will be:  €0 – €12,012 - 0.5% (no change);  €12,013 – €27,382 - 2%;    €27,383 – €70,044 – 3%    €70,045+ - 8% (no change); and  Self-employed income over €100,000 - 3% surcharge (no change).  Incomes of less than €13,000 remain exempt from USC.  According to the Minister for Finance’s speech, these changes means that a full-time worker on the minimum wage will see an increase in their net take home pay of approximately €1,424 on an annual basis and a single person earning €20,000 or less in 2025 will now be outside of the income tax net.  The estimated cost of the changes in USC is €470 million in 2025 and €540 million per annum thereafter.   Sea-going naval personnel tax credit  The sea-going naval personnel tax credit will not end on 31 December 2024 and has been extended for a further five years to 31 December 2029. This tax credit is €1,500 per annum for permanent members of the Irish Naval Service who have spent at least 80 days at sea in the previous year performing the duties of his/her employment. The cost of retaining this credit is estimated to be €500,000 per annum.  Small benefit exemption  The limit of the “Small Benefit Exemption” will increase to €1,500 and the number of benefits that an employer can give will also increase from two to five per year so that the cumulative total of the first five benefits in a year shall not exceed €1,500. This is an issue that the Institute has lobbied upon extensively on behalf of members. No date was given for when these increases will take effect.  Pensions auto enrolment  Finance Bill 2024 will provide for the taxation of the Automatic Enrolment Retirement Savings Scheme (referred to as AE). It is expected that AE will be introduced in September 2025. The Institute has long supported the introduction of AE but has asked requested that it be introduced at an appropriate time, being mindful of the cost pressures SMEs in particular are under.    According to the Budget publications, the tax treatment “aligns as much as possible with that of Personal Retirement Savings Accounts (PRSAs), other than for employee contributions.”   Employer contributions will be tax relieved, the growth in the AE funds will be exempt from tax and the AE funds will be taxed on draw down, other than the 25 percent tax free lump sum.   The lump sum will be able to be taken tax free up to €200,000, will be taxed at 20 percent between €200,000 and €500,000 and taxed at 40 percent above €500,000.   As the State will be making a direct contribution for employees within the AE scheme, no tax relief will be provided for employee contributions to AE.  Vehicle benefits in kind  The temporary universal relief of €10,000 applied to the Original Market Value of a vehicle (including vans) for vehicles in Category A-D and the amendment to the lower limit of the highest mileage band is being extended to 31 December 2025. 

In advance of the extended filing date of Thursday 14 November 2024 for filing income tax and CAT returns via ROS, Revenue has announced a range of supports. Read on for more information. The ROS technical helpdesk will help filers who experience technical difficulties accessing ROS and can be contacted via chatbot, My Enquiries, email (roshhelp@revenue.ie), or telephone (01 738 3699), The ROS payment support unit can be accessed via My Enquiries, or the Collector General’s Division (01 738 3663), and For help filing an Income tax Form 11, queries can be directed to My Enquiries, or the Businesses Taxes helpline can be reached on 01 738 3630. Full details of the above supports, in addition to the extended support opening hours, can be found in Revenue’s eBrief No. 248/24.

Part 11 of Revenue’s Capital Acquisitions Tax Manual has been revised and refreshed with the aim of providing clearer and more comprehensive guidance on agricultural relief. In addition to the manual being updated for Finance (No.2) Act 2023 amendments, the main changes include: The concessional treatment which allowed the active farming requirements to commence from the date of the inheritance has been removed, and The Q&As that were provided in Appendix 1 have been removed and the contents instead have been incorporated into the main body of the guidance. Further details can be found in Revenue eBrief No 246/24.

Revenue has updated its guidance in the rent tax credit manual to reflect the increase in the rent tax credit for the 2024 and 2025 tax years. In addition, the following changes introduced by Finance (No. 2) Act 2023 are also reflected: The change in respect of eligibility where a parent is paying rent for a child (Paragraph 5.3 and Appendix 1), Out of year and in year claims (Paragraph 7.3), The inclusion of more examples, and Income tax returns for 2022 and 2023 can be used where taxpayers are seeking to claim the rent tax credit in respect of payments made for digs or rent-a-room type arrangements to facilitate a child’s attendance at an approved course. This change applies retrospectively to 2022 and 2023.

The Institute’s Advocacy and Voice Department is hiring a new Tax Manager. The Department is responsible for the tax and public policy agenda of Chartered Accountants Ireland. We collaborate with expert colleagues drawn from practice and industry, developing, and advocating on policy matters relating to tax, financial reporting, audit and assurance, ethics and governance, and business law. The department numbers over twenty professionals. The successful candidate will report into the Institute's Tax Leader (Head of Tax). You can find more information at the above link. If you are interested in applying, send your CV and a cover letter to hr@charteredaccountants.ie.  

At last week’s Labour Party conference, the Chancellor of the Exchequer’s speech (see from 11.47 on) unveiled a package of tax and other measures which aim to deliver on the agenda of the new government, one of which includes e-invoicing. A press release published after the Chancellor’s speech also provides some more details on the Government’s plans for tax administration and HMRC. The announcements essentially build on proposals set out by the Government before the election in their ‘Closing the Tax Gap’ document and in summary are as follows: HMRC will launch a consultation on electronic invoicing (e-invoicing) which will “gather input from businesses on how HMRC can support investment in and encourage e-invoicing uptake”. This suggests that there is no intention to make e-invoicing mandatory however the consultation will provide more information and is likely to be published on Budget Day on 30 October, By Spring 2025, a Digital Transformation Roadmap will be published which will set out “HMRC’s vision to be a digital first organisation underpinned by customer insight”. This “will include measures to ensure digital inclusion and support for customers who cannot yet interact digitally”, An additional two hundred offer letters have been sent out to new recruits to join HMRC’s training programme in November as part of plans to recruit an additional 5,000 compliance staff to help close the tax gap (with no mention made of recruitment to improve HMRC’s services), and The Exchequer Secretary to the Treasury (XST) has become the Chair of the HMRC Board. This aims to help the XST oversee the implementation of his three strategic priorities for HMRC: closing the tax gap, modernising, and reforming, and improving customer service. The Press Release also mentioned the planned development of an Industrial Strategy to be published in Spring 2025 following consultation with business. A green paper is expected beforehand “around Budget in October”. During his speech to the Labour Party Conference, the Prime Minister restated the Labour Party’s manifesto commitment to replace the apprenticeship levy with a new growth and skills levy. According to a press release accompanying the speech, in England this will include new ‘foundation apprenticeships’ and will allow funding for shorter apprenticeships than currently possible under the apprenticeship levy. Employers will also be asked to rebalance their funding towards younger workers. Further information on how the new levy will operate, and implications for funding training in Northern Ireland, Scotland, and Wales (where apprenticeship training is devolved) is likely to be announced at the Budget. The e-invoicing consultation announced last week is of particular interest. HMRC, under the auspices of the Joint Vat Consultative Committee which the Institute participates in, has already begun engaging with stakeholders for their views on this in order to “inform the planned consultation and ensure that we deliver a regime which supports businesses by reducing administrative burdens, speeding up payments and making tax compliance easier.” Chartered Accountants Ireland has already highlighted the significance of this change to HMRC. Ireland has recently been consulting on the modernisation of its VAT regime including e-invoicing which the Institute responded to in January this year highlighting the challenges that SME businesses in particular will face. In a broader context, should this proposal proceed in the UK, the timetable for its introduction will need to be very carefully considered as many SMEs are facing significant change in other areas of the UK tax system in the future; the payrolling of benefits in kind from April 2026 and the mandation of Making Tax Digital for income tax from the same date to name but two.

A few weeks ago we issued a request for support from companies who would like to see a lower rate of corporation tax in Northern Ireland as the Institute kicks off a revived campaign. There is still time to participate in this campaign. Does your Northern Ireland based company or client support a lower rate of corporation tax for the region? If so, read on for how you can participate in our campaign to reignite the path to a lower rate of corporation tax for the region.  The Corporation Tax (Northern Ireland) Act 2015 contains the legislation for how a lower rate of corporation tax would work practically in Northern Ireland. However, this is subject to rate-setting arrangements which mean that this rate-setting power may not be exercised unless Treasury regulations have been made. These Treasury regulations are subject to very specific conditions specifically the continued commitment of the NI executive to “take all the actions necessary to demonstrate that its finances are on a sustainable footing for the long term”. The support of the Institute’s members for a lower rate of corporation tax in Northern Ireland has not waned in recent years with a recent Ulster Society survey showing that approximately two thirds of our members continue to support this initiative. On foot of this ongoing support combined with the restoration of the Northern Ireland Assembly and a new government in Westminster, Chartered Accountants Ireland is embarking on a new campaign to engage with and equip policy makers with the information and tools necessary to pursue a lower rate of corporation tax for the region as one of a range of economic levers to drive growth and employment.  We are seeking companies in Northern Ireland who support this campaign and who are prepared to tell us why they support a lower rate and what it would mean for them and the region. These quotes will be included in a position paper which is expected to be launched before the end of 2024. Contact tax@charteredaccountants.ie to participate.    

Last week we reminded you that the 2023/24 self-assessment registration deadline is approaching. It is now just six days’ away on Saturday 5 October 2024 in order to avoid a failure to notify penalty. Those required to register for self-assessment include anyone who is: self-employed or a sole trader in a business which commenced in 2023/24, ·not self-employed but who had a new source of income or a gain in 2023/24, or became a partner in a partnership or any new partnership which commenced in business in 2023/24. 

In this week’s miscellaneous updates, we bring you news of a new role for the Office of Budget Responsibility (OBR) and the latest HMRC performance data has been published. HMRC’s bank details have changed in respect of paying several taxes and the letter sent to taxpayers when they authorise an agent to act on their behalf via the online agent authorisation service has been updated. And finally, the latest HMRC Stakeholder Digest has been published. New role for OBR The Budget Responsibility Act 2024 received Royal Assent earlier this month on 10 September 2024. The aim of this legislation is to ensure that “future fiscal announcements making significant, permanent tax and spend changes” will be “subject to an independent assessment by the OBR”. More information on what this means is set out in the Press Release published in July when the original Bill was introduced to Parliament. HMRC bank details changed Agent Update 123 highlights that HMRC has changed its bank accounts for payment of the following taxes: the customs declaration service, plastic packaging tax, fuel duty, economic crime levy, soft drinks industry levy, and the trust registration service penalty. Taxpayers who make payments via Faster Payments, BACS or CHAPS should use the new details. Anyone paying by direct debit is not required to take any action. Updated agent authorisation letters In another story from Agent Update 123, HMRC has updated the letter which is sent to taxpayers when an agent is authorised to act on their behalf via the online agent authorisation service. According to HMRC, the changes are intended to clarify the role of the agent and in particular, reinforces that the taxpayer retains responsibility for their own tax affairs.

In this week’s EU exit corner, we bring you the latest guidance updates and publications relevant to EU exit. The most recent Trader Support Service bulletin is also available as is the latest Brexit and Beyond newsletter from the Northern Ireland Assembly EU Affairs Team. We also bring news of changes to excise goods legislation for Northern Ireland which take effect from 1 October 2024 and remind you that the next changes in the Windsor Framework do not commence from 30 September 2024 and have been delayed to 31 March 2025. Changes to excise goods legislation for Northern Ireland Legislation takes effect from 1 October 2024 which makes several changes to the holding and movement of excise goods in Northern Ireland. The purpose of this legislation is to make “technical fixes to the statute book to better implement the EU excise provisions applicable in Northern Ireland under the Windsor Framework of the EU Withdrawal Agreement”. More information is available at the following links: Excise Duties (Northern Ireland Miscellaneous Modifications and Amendments) (EU Exit) (Amendment) Regulations 2024, SI 2024/941, and Policy paper. Miscellaneous updates to guidance and publications CDS Declaration Completion Instructions for Exports, Appendix 1: DE 1/10: Requested and Previous Procedure Codes of the Customs Declaration Service (CDS), Additional Information (AI) Statement Codes for Data Element 2/2 of the Customs Declaration Service (CDS), CDS Declaration Completion Instructions for Imports, 4-digit to 3-digit procedure to additional procedure code correlation matrix for imports, Tax types for Data Element 4/3 of the Customs Declaration Service, Data Element 2/3: Documents and Other Reference Codes (Union) of the Customs Declaration Service, CDS Customs Clearance Request Completion Instructions for Inventory Exports, Appendix 2: DE 1/11: Additional Procedure Codes of the Customs Declaration Service (CDS), CDS BIRDS Declarations and Customs Clearance Request completion instructions, National additional codes to declare with Data Element 6/17 of the Customs Declaration Service, Appendix 23 Imports: Declaration Category Data Sets, Upload documents and get messages for the Customs Declaration Service, Moving goods between Great Britain and the UK Continental Shelf, Trade Specialised Committee on Administrative Co-operation in VAT and Recovery of Taxes and Duties, Report a problem using the Customs Declaration Service.

We have compiled the latest updates to various VAT legislation, publications, briefs, and guidance. HMRC has also contacted us to advise that several Revenue and Customs Briefs have been removed from gov.uk and guidance has been updated where applicable. Register for VAT by post, VAT Personal exports - tax-free sales of new motor vehicles for use before export, Charity funded equipment certificates (VAT Notice 701/6 supplement), VAT Assessments and Error Correction, Who should register for VAT (VAT Notice 700/1), VAT domestic reverse charge technical guide, Help with VAT compliance controls — Guidelines for Compliance GfC8, and Value Added Tax (Caravans) Order 2024, SI 2024/910 and policy paper.