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.

Budget 2024 saw the announcement of a further €338 million to the core spending budget of the Department of Children, Equality, Disability, Integration and Youth. Included in the package is a planned increase to the National Childcare Scheme hourly subsidy from €1.40 to €2.14, effective from September 2024. Also included in this budget allocation is a €10.5 million commitment designed to improve pay and conditions for childcare workers, enhance sustainability for providers and maintain current fee freezes. Also included are measures to reduce the costs of both the school and further education cohort. Additional family related measures introduced in Budget 2024 include: funding to extend the Free School Books Scheme to all junior cycle pupils in recognised post-primary schools within the Free Education Scheme from September a €400 lump sum payment will be made to recipients of the Working Family Payment and an increase of the income threshold by €54 per week a €100 lump sum payment will be made to each child in receipt of the Qualified Child Increase an extension of the fee reduction on school transport services for a further year an extension of the fee waiver for students sitting state exams a once-off reduction of the student contribution fee by €1,000 for free fees’ students an extension of Parents Benefit to 9 weeks from August 2024 an extension of the Child Benefit payment to 18-year-olds in full time education

The Minister announced changes to the rules for capital acquisitions tax for foster children and a new capital gains tax relief for angel investment. In addition, the Minister announced some welcome enhancements to Retirement Relief, increasing both the age-limit and the asset-value limit. Capital Acquisitions Tax Foster children are to 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 parents. Capital Gains Tax (“CGT”) Retirement Relief In line with Government policy on the age of retirement, from 1 January 2025 the upper age limit for capital gains tax Retirement Relief is to be extended from 65 until the age of 70. The reduced relief which was available on disposals from age 66 onwards will now apply from age 70. Also from 1 January 2025, there will be a new limit of €10 million on the relief available up to age 70 for disposals to a child. Angel Relief A new CGT relief is also being introduced to encourage angel investment innovative start-ups, in line with the recommendation from the Commission on Taxation and Welfare. The relief will be available to an individual who invests in an innovative start-up small and medium enterprise (SME) 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.   The scheme will include a certification process, which will  be  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. Qualifying investors may avail  of  an  effective  reduced  rate  of  CGT  of  16 percent,  or  18 percent  if through  a  partnership, on a gain up to twice the value of their initial investment.  There is a lifetime limit of €3 million on gains to which the reduced rate of CGT will apply.  

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.

Budget 2024 contained a suite of new measures in the context of housing policy including an increase in the rental tax credit, the introduction of a new tax relief for landlords as well as a new scheme of mortgage interest relief for homeowners. In addition, amendments were made to a number of existing measures such as the Help-to-Buy Scheme, Vacant Homes Tax and Residential Zoned Land Tax. Rental Tax Credit  Since its introduction in last year’s Budget, over 290,000 rent tax credit claims have been made with close to €166 million worth of claims made to date. The rent tax credit is now being amended to increase the amount that can be claimed from €500 to €750. As before, the credit will be available to renters who are not already availing of State housing supports. The proposal relates only to tenancies registered with the Residential Tenancies Board and licences for the use of a room in another person’s principal private residence. Eligibility for the credit will now also be extended to parents who pay for their student children’s rental accommodation in the case of Rent-a-Room accommodation or “digs”.  This change will apply retrospectively to the years 2022 and 2023.  Rented Residential Relief In addition to increased supports for tenants, the Budget also introduced a new tax relief for landlords. The new Rented Residential Relief will provide relief, at the standard rate, on a portion of a landlord’s residential rental income. The new relief apply as follows: €3,000 in the tax year 2024; €4,000 in 2025, €5,000 in 2026 and €5,000 in 2027 which is equivalent to a tax credit of up to €600, €800 and €1,000 respectively.  The relief will be clawed back if the landlord removes the property on which relief is claimed from the rental market within 4 years of the initial claim. However, no clawback will apply after the expiry of the 4-year period. The relief will apply only to tenancies registered with the Residential Tenancies Board, or where a landlord lets a residential property to a public authority (including a Local Authority). In the case of joint ownership of a property, the relief will be divided in proportion to the percentage of the rental income to which each owner is entitled.  Mortgage Interest Tax Relief In light of the current high interest rate environment facing many mortgage holders, Budget 2024 has also seen the introduction of a temporary one-year mortgage interest tax relief scheme for homeowners. Relief will apply to homeowners with an outstanding mortgage balance on their principal private residence of between €80,000 and €500,000 on 31 December 2022. Qualifying homeowners will be eligible for mortgage interest tax relief in respect of the increased interest paid on that loan between the calendar year 2022 compared to the calendar year 2023 at the standard rate of income tax (20 percent), capped at €1,250 per property. In order to claim the relief, the taxpayer must file a tax return with Revenue. The relief will operate by way of a credit offset against the taxpayer’s income tax liability for 2023 and may be claimed in early 2024.  Help-to-Buy Scheme  The Minister also announced the Government’s intention to extend the Help-to-Buy (HTB) scheme to the end of 2025. In addition, the scheme is also being amended to reflect its interaction with the Local Authority Affordable Purchase Scheme (LAAP). This  amendment will enable the use of the affordable dwelling contribution received through the LAAP scheme for the purposes of calculating the 70 percent loan-to-value requirement, thereby facilitating greater access to the HTB scheme to all LAAP purchasers. These changes will come into effect from 11 October 2023. Vacant Homes Tax  With a view to incentivising the use of existing housing stock across the country, the Minister has also announced an increase to the Vacant Homes Tax. With effect from 1 November 2023, the rate will be increased from three times to five times a property’s existing base Local Property Tax liability.  Residential Zoned Land Tax Originally introduced in Budget 2022 as a measure “to encourage the use of land for building homes”, the Residential Zoned Land Tax (RZLT) aims to activate suitably zoned and serviced land for housing.  In order to afford affected landowners' sufficient opportunity to engage with the mapping process and ensure that a fair and transparent process is applied when local authorities consider what land should be placed on the RZLT maps, the Minister has announced an extension of the liability date for the tax by one year. The original liability date was 1 February 2024.  RZLT applies at a rate of 3 percent on the market value of land within its scope.  Defective Concrete Products Levy As previously announced last month, this levy is being amended so that it will no longer apply to the pouring concrete used in the manufacture of precast concrete products. A refund scheme is also being put in place to allow those who paid the levy on such concrete between 1 September 2023 and 31 December 2023 to reclaim it.  

In an effort to ease the ongoing cost of living pressures brought about by increased prices and inflation, the Minister for Finance announced a €2,000 increase in the standard rate band, in addition to a €100 increase in the personal tax credit, employee tax credit and earned income tax credit. The home carer tax credit and single person child carer tax credit will each increase by €100, and the incapacitated child tax credit will increase by €200. The middle rate of USC will be reduced from 4.5 percent to 4 percent. Additional measures announced also included changes in the USC to ensure the increased minimum wage remains outside the top rates of the charge. The average worker can expect to pay around €800 less in income taxes. Credits and rate bands changes from 1 January 2024 The income tax standard rate bands will increase as follows: Single, widowed or surviving civil partner from €40,000 to €42,000; Single, widowed or surviving civil partners, qualifying for the Single Person Child Carer Credit from €44,000 to €46,000; Married couples or civil partners (one income) from €49,000 to €51,000; Married couples or civil partners (two incomes) from €49,000 to €51,000 (with a maximum increase of €33,000). The personal tax credit, employee tax credit and earned income tax credit will all increase from €1,775 to €1,875. The home carer tax credit will increase from €1,700 to €1,800, while the single person child carer credit will increase from €1,650 to €1,750. The incapacitated child tax credit will increase by €200 from €3,300 to €3,500. For example, a single person earning €45,000 will receive at least an additional €767 in their take home pay, when the USC changes (discussed below) are also considered. Those earning below the standard rate band threshold have the opportunity to earn additional income without paying tax at the marginal rate. The estimated cost of these measures is €1.135 billion on a full year basis. USC To ensure that the salary of a full-time worker on the minimum wage will remain outside the new 4 percent rate of USC when the minimum wage increases from €11.30 to €12.70 from 1 January 2024, the ceiling of the 2 percent USC rate band will increase by €2,840 from €22,920 to €25,760.  The 4.5 percent rate will reduce to 4 percent. As a result, the USC rates and bands from 1 January 2024 will be: €0 – €12,012 - 0.5% - no change; €12,013 – €25,760 - 2%; €25,761 – €70,044 - 4% €70,045+ - 8%; and Self-employed income over €100,000 - 3% surcharge. Incomes of less than €13,000 are exempt from USC. The Minister also announced the extension of the reduced rate of USC for medical card holders to 31 December 2025. The estimated cost of these changes in USC is €350 million in 2024 and €400 million per annum thereafter. Benefit-in-Kind on Motor Vehicles The temporary relief of €10,000 on the Original Market Value of vehicles (and vans) in Categories A to D has been extended to 31 December 2024. The amendment lowering the limit of the highest mileage has also been extended to 31 December 2024. Sea-going naval personnel tax credit The sea-going naval personnel tax credit will be extended to 31 December 2024. It applies where a permanent member of the Irish Naval Service spends at least 80 days at sea on board a naval vessel in the previous tax year. In such circumstances, he/she is entitled to a tax credit of €1,500. The cost of the extension of the credit is estimated to be €500,000. PRSI From 1 October next year all PRSI contribution rates will increase by 0.1 percent. Donations of heritage items This tax relief is available to taxpayers who donate heritage items to Irish national collections. A credit equal to 80 percent of the market value of the item donated can be set against donors’ liabilities for income tax, corporation tax, capital gains tax or gift and inheritance tax. Currently, the aggregate value of items that can be donated under the scheme in any one year cannot exceed €6 million; this limit is to be increased to €8 million.

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      

At the September meeting of the TALC Direct and Capital Taxes Sub-committee, practitioners noted issues arising when filing returns for Reliefs for Investment in Corporate Trades (RICT). RICT returns are due for filing by 30 April each year and an error arose in respect of the 30 percent spend fields in the Return.  In a recent email from Revenue, they have advised the following:  “Further to our recent guidance in relation to the issues experienced by users which prevented the upload of the RICT return ahead of the filing deadline of 30 April 2023 due to errors arising whereby the provision of a date by which 30 percent of the investment was spent on a qualifying purpose was required in order to complete the return for investments made on or after 1 January 2022, we wish to provide the following update:  The ‘lock’ that is currently placed on the return which does not allow for filing of the return for 2022 investments after 30 April 2023 is to be lifted within the next week following which it will be possible to file returns in relation to 2022 investments. We will send a further update when that has happened.    The resolution of the 30 percent spend issue outlined above will however take longer to complete.    Once the lock has been lifted, and pending the resolution of the 30 percent spend issue, companies and practitioners may insert the date of share issue as the date of having met the 30 percent spend requirement to allow for completion and uploading of the RICT return and the generation of Statements of Qualification.” 

The time limit for making a claim under the Temporary Business Energy Support Scheme (TBESS) expired on 30 September 2023. Revenue has published preliminary statistics which provide breakdowns of TBESS registrations, approved claims and payments by economic sector, employment size, trade and county. In total, 31,309 businesses registered for the scheme, with 62,478 approved claims valued €145.32 million.