The Parliamentary Budget Office (PBO) has published its Spring Commentary 2024. This latest publication provides analysis on areas such tax forecasts, employment, climate-related spending, as well as the newly proposed EU Governance Economic Framework and what the new rules mean for Ireland.   With tax receipts in the first quarter of 2024 exceeding those from the same period in 2023, overall tax revenue is projected to rise by 4.6 percent compared to 2023. However, forecasted tax receipts for 2024 have been revised downwards by €440 million to €92.1 billion. The downward revision is primarily attributable to lower forecast VAT and capital gains tax, which will be partially offset by expected increases in income tax.  The report also highlights the significant concentration risk in the public finances with 7.7 percent of top earners responsible for 54.1 percent of income tax paid in 2021 and the top ten corporate groups accounting for 56 percent of corporation tax receipts in 2023.  

Section 97B TCA 1997 provides for a deduction against rental income for individual landlords who undertake retrofitting of rented residential premises between 1 January 2023 and 31 December 2025 while the tenant remains in situ. The tax deduction is conditional on the landlord having received a grant from the SEAI (Sustainable Energy Authority of Ireland) for the retrofitting works. Revenue has published a new Tax and Duty Manual to provide guidance on the deduction for retrofitting expenditure under section 97B TCA 1997.  

Revenue has updated the Tax and Duty Manual which provides guidance on the enhanced reporting requirements (ERR) for employers. The guidance confirms that Revenue do not require reporting under ERR in regard to unpaid volunteers whose only payments are for travel and subsistence expenses incurred in the performance of their volunteer duties in not-for-profit organisations. 

Revenue has updated the Tax and Duty Manual regarding the provision of non-taxable miscellaneous benefits by an employer to their employees. The manual now includes additional guidance on the tax treatment of examination awards (paragraph 8.1), and confirms that an employer's contribution to an employee's Personal Retirement Savings Account (PRSA) is no longer treated as a benefit in kind (paragraph 21). 

Revenue has updated the Tax and Duty Manual regarding Deposit Interest Retention Tax (DIRT) exempt accounts and refund of DIRT. The updated guidance provides that interest arising on a deposit that is solely in respect of a general payment, and work-related payment if applicable, under the Mother and Baby Institutions Payment Scheme can be paid without deduction of DIRT. Payments made in respect of the Mother and Baby Institutions Payment Scheme are exempt from income tax under section 205B TCA 1997.  

Revenue has updated the Tax and Duty Manuals that provide guidance for dealing with the tax and duty affairs of deceased taxpayers. The manual titled “Dealing with Death Cases” has been updated to include details of the various channels through which Revenue is advised about the death of a taxpayer. It also outlines the actions by caseworkers to update the taxpayer record and ensure that the notification is processed in a timely and sensitive manner.   The manual titled "Requests for clearance in death cases" explains the process for persons acting in a representative capacity to request clearance to distribute an estate after the death of a taxpayer. The updated manual provides guidance on how the clearance request should be submitted using MyEnquiries (paragraph 3), with examples of death case clearance requests in MyEnquiries contained in appendix 6. Clearance requests should be submitted under the agent/solicitor’s TAIN number, using the ROS cert associated with that TAIN number, rather than under a solicitor or agent’s own tax registration number (appendix 7). Guidance is also provided on the online registration of estate cases and linking the estate registration to the deceased person's record (appendix 8). Readers are reminded that all requests for 'deemed clearance' must be in line with the requirement for due diligence set out in the guidance. 

Revenue has updated the Tax and Duty Manual which sets out guidelines for determining the residence of trusts and estates under administration in accordance with the Double Tax Treaty between Ireland the United Kingdom. The manual has been updated to incorporate changes to Article 4(3) of the Double Tax Treaty between Ireland and the United Kingdom arising from the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The MLI introduced a new tie-breaker rule for the determination of treaty residence of persons, other than individuals, that are resident of more than one jurisdiction.  

Last month we updated readers on developments in this space ahead of HMRC’s plan to widen the beta trial in 2024/25, commencing from 22 April. As set out in that update, HMRC has now expanded the beta trial and recently sent an email to agents providing information on how to sign qualifying clients up to the Making Tax Digital (“MTD”) for income tax trial. Further updates are set out below.   Suspension of meetings  The Institute is currently considering how best to support members in their preparations for this change and we will continue to attend HMRC forums on MTD. However, it should be noted that due to the pre-election period (known as purdah), HMRC has now suspended some forum meetings, including meetings on MTD.  Technical consultation on new regulations  HMRC has launched a technical consultation on proposed new regulations (“The Penalties for Failure to Pay Tax (Assessments) Regulations 2024”), which is running until 10 June 2024.   These draft regulations relate to the reformed penalty system for late payment of tax, which is set out in Schedule 26 to the Finance Act 2021. Penalty reform began for VAT taxpayers from 1 January 2023, and from April 2024 for Income Tax Self-Assessment (“SA”) for those participating in the MTD for income tax beta trial. For all other Income Tax SA taxpayers, penalty reform will commence from April 2026 as MTD for income tax begins to be mandated  Current legislation allows HMRC to assess a second late payment penalty within a two-year assessment time limit, at the point the outstanding tax is paid in full. However, HMRC is not able to assess this penalty if the tax remains unpaid. The proposed legislative change will allow the second payment penalty to be assessed towards the end of the time limit, in circumstances where the outstanding tax has not yet been paid in full. This will mean taxpayers will not be able to intentionally avoid a second late payment penalty by not paying their outstanding tax before the end of the two-year time limit.   New MTD manual   A new manual on how to use MTD for income tax has now been published. Since our last update, the number of available software packages, which already includes some of the big players, has been expanded from five to seven, with a range of other software packages in development. 

Revenue has updated the Tax and Duty Manual which provides guidance on filing and paying Stamp Duty. The manual has been updated in section 5 to include guidance on using the offline Return Preparation Facility (RPF). Readers are advised that only the RPF facility should be used where applying for Young Trained Farmer relief. 

Revenue has updated the Stamp Duty Manual which provides guidance on the exemption from stamp duty on conveyances and transfers of property between associated companies. The exemption is provided under section 79 SDCA 1999 and is generally referred to as “associated companies relief”.  The manual has been updated to clarify the treatment that may apply in the case of a merger of a trade where the transferred property comprises trading assets, such as inventory, which are naturally utilised during the course of the trade within the two-year holding period (section 5.3.1). The manual has also been revised and refreshed throughout. 

Today we are issuing a final reminder that the deadline for employers to provide employees with their P60 for 2023/24, either on paper or electronically, is Friday 31 May 2024. The P60 summarises the employee’s total pay and deductions for the year.   By that date, employers must give a P60 to all employees on payroll who were working for them on the last day of the tax year (5 April 2024). If an employer is exempt from filing payroll online, copies of P60s can be ordered from HMRC. 

After the Spring Budget took place on Wednesday 6 March, the Spring Finance Bill 2024 (official title Finance (No. 2) Bill 2023-24) was published. The Bill reflects many of the tax measures announced as part of the Spring Budget. It is currently awaiting Royal Assent with many stages having taken place at speed last week due to the announcement of the General Election which will take place on Thursday 4 July. Parliament is to be dissolved later this week on Thursday 30 May.