Budget 2025

Oct 1, 2024 | Blog

 

 

BUDGET 2025

Jack Chambers, Minister for Finance and Paschal Donohoe, Minister for Public Expenditure & Reform delivered their Budget speeches in the Dáil at 1pm on Tuesday 1st October 2024.

With the wars in Israel and Ukraine still raging and extending into Lebanon, and uncertainty in the markets globally, all eyes in Ireland were on the coalition government to see what respite and supports would emanate from Budget 2025.

The Coalition announced a pre-election budget with spending increases and tax cuts worth more than €8.3 billion which will consist of a core expenditure package of just under € 6.9billion and a tax package of over €1.4billion. There is also a package of once-off cost of living measures of €2.2billion, net of revenues, which brings the total package for Budget 2025 to € 10.5billion.

John Lowe of MoneyDoctors.ie reports….

Highlights at a glance…

  • Personal income tax package of € 1.6billion including increase of € 2,000 for the standard rate of tax, € 125 for personal credits and 80c increase in minimum wage.
  • Social Protection package of € 2.2billion .. one of the biggest ever including € 12 per week on all social welfare payments
  • Cost of living package € 2.2billion including energy lump sums either side of Christmas
  • Department of Housing to be allocated €7.8 billion – including €2 billion for construction of 10,000 social homes
  • € 4.3billion into the Future Ireland Fund, € 2billion invested into the Infrastructure, Climate and Nature Fund next September plus € 750million into the Electricity Grid and € 1.25billion into the Land Development Agency the latter to build social affordable homes.

 

INCOME & OTHER TAXES

Income tax

  • Standard rate of tax increased by € 2,000 from € 42,000 to € 44,000
  • Personal Tax Credit, Employee Credit and Earned Income Credit increased by € 125
  • The Home Carer Tax Credit increased by € 150
  • The Single Person Child Carer Creditincreased by € 150
  • The Incapacitated Child Tax Creditincreased by € 300
  • Blind person’s Tax Credit increased by € 300
  • Employees can now receive a bonus up to € 1,500 tax free from their employers … was € 1,000.

 

Pay Related Social Insurance (PRSI)

  • ALL PRSI rates remain the same.

 

Minimum wage levels

  •  Minimum wage to increase by 80 cent from January 1st, 2025, rising to €13.50 an hour

 

Universal Social Charge

  • The 4% rate is reduced to 3% with a starting threshold of € 27,372.
  • If you are over 70 years of age and have income of less than € 70,000, the USC is only 2%

 

Corporation Tax

  • Unchanged – still 12.5% for the majority of companies.

Capital Gains Tax

  •  Remains the same @ 33%

Capital Acquisition Tax ( inheritance tax )

  • The threshold for Group A category ( parent to child ) € 400,000 an increase of € 65,000 ( first change in 5 years )
  • Categories B increased from € 32,500 to € 40,000 & Category C from € 16,250 to € 20,000
  • The CAT Tax Rate remains @ 33% over these thresholds.
  • New rates apply from 2nd October 2024

EXIT investment rates

  • No change in the Budget speech in the exit tax rate of 41% on investments.

 

ENERGY & THE MOTOR INDUSTRY

  • On one-off measures, there will be two energy credits worth €125 each, deducted from electricity bills, one before Christmas and one in the New Year.
  • €3 billion bundle for infrastructure including water and energy.

Transport

  • An end to the Motor Insurers Insolvency Compensation Fund – 1% on insurance premiums – from January 1st, benefiting up to 2.2 million policyholders.
  • Amendments to the Vehicle Registration Tax (VRT) regime for electric commercial vehicles will mean they qualify for the €200 rate. At present, due to the heavy battery weight, many electric vans exceed the 3½-tonne limit for the lower rate of tax.
  • Public transport fares – reduced fares of 20% on public transport will continue in 2025.
    • Free public transport for the under 9s
    • Over-70s can bring another person on public transport free of charge in new ‘Universal Companion Pass’ measure
  • Petrol and diesel prices are set to rise via an increase in Carbon tax rate per tonne of carbon dioxide emitted for petrol and diesel and will go up €7.50, from €56 to €63.50, from October 9th
  • The changes will mean an additional €12 per full tank for motorists….
  • Improved benefit-in-kind (BIK) relief on electric vehicles (EVs) up to €45,000 and installing rechargers in homes of company directors and employees

 

SOCIAL WELFARE BENEFITS

  • ALL Social Welfare benefits increased by € 12 per week…             
  • A double payment bonuswill be paid in October 2024 to people getting a qualifying social welfare payment.
  • Carers will receive an increased Carer’s Support Grant ( up € 150 ) from €1,850 to €2,000 (June 2025).
  • Self-employed people can now get Carer’s Benefit ( € 286 per week plus more if there are children )
  • A € 200 Living Alone one-off payment

 Once off payments….

  • Payments to families…
  • Child Benefit double payment in November AND December ( € 280 ) and

triple Child Benefit payment to newborn babies from January 2025

  • The Increase for a Qualified Child (IQC) will be renamed the Child Support Payment. The weekly rate will increase by €4 from €46 to €50, for children under 12 years of age. It will increase by €8 from €54 to €62 for children aged 12 years and over (January 2025).
  • The Working Family Payment will pay a lump sum of € 400 to all family sizes.
  • Maternity, paternity, adoptive and parents leave to rise by € 15 to € 289 per week.
  • A 44% increase ( € 220 to € 720 ) to the National Childcare Scheme will mean an average reduction in costs of €1,100 per child

HEALTHCARE 

  • The Department of Health budget allocation is €25.76 billion – an additional € 2.7billion.
    • There are 495 new beds for the health service in Budget 2025.
    • There will be an increase in the numbers working in the health service, not including disability services, and will reach over 130,000 whole-time equivalents, an increase of 27 per cent since 2019.
    • The Government has added 600,000 home support hours.
    • That’s in addition to increased access to free IVF and Hormone Replacement Therapy (HRT) free of charge.

 

 HOUSING, THE HOMELESS AND OTHER SOCIAL HOUSING BENEFITS

  •  A third rate of stamp duty, worth 6% which will be introduced for properties worth over €1.5m. Existing stamp duty of 1% will continue to apply for properties worth up to and including €1m, 2% on properties worth over €1m but less than €1.5m. The new 6% rate is kicking in from tonight.
  • The government introduced a temporary 1 year mortgage relief for c. 160,000 homeowners with an outstanding mortgage balance on their home of between € 80,000 and € 500,000 on 31st December 2022. The relief will be calculated on the increase in interest paid in the calendar year 2022 against that paid in 2023, at the standard rate of income tax of 20%. The relief is capped at € 1,250 per property and will be extended for 2025.
  • Help to Buy scheme retained for first-time buyers of new homes by way of a 10% income tax refund. Maximum payment is € 30,000 and only eligible up to a purchase price of € 500,000.

The rebate will be of income tax paid over the previous four years and only purchases of new homes will qualify. The applicants must also take out a mortgage of 70% of the purchase price to qualify. This scheme is retained to 31st December 2029.

  • Rental tax relief to tenants in their principal private residence of € 750 per annum increased to € 1,000 per annum and € 2,000 for jointly assed couples benefitting over 400,000 tenants. Parents who pay for tenancies for their student children in Rent-a-Room or digs-type accommodation will be able to claim the Rent Tax Credit.
  • Further assistance to the housing market by way of introduction of a Rented Residential relief for landlords. The relief will continue at the standard rate as follows…
  • € 4,000 in the tax year 2025
  • € 5,000 in the tax years 2026 & 2027

             A full clawback of the relief will apply should the relevant property be

removed from the rental market during this time.

  • The Vacant Homes Tax rate will be increased to 7 times the basic Local Property Tax (LPT)
  • Vulture funds and other investors buying multiple properties will pay 15% stamp duty – an increase of 5%

 

SMALL & MEDIUM SIZED BUSINESSES

  • VAT (Valued Added Tax)
    • The 9% VAT rate on restaurants is increased to 13.5%.
    • The reduced 9% VAT rate for gas and electricity is extended to 30th April 2025.
    • VAT on heat pumps reduced to 9% from 13.5%

Zero VAT rates still apply to :

      • Newspapers
      • Defibrillators
      • Period products
      • Hormone replacement products
      • Nicotine replacement products

 INDIRECT TAXES, EXCISE AND OTHER DUTIES

  • Tobacco – Excise duty on a 20-pack of cigarettes to increase by € 1, with pro rata increases for other tobacco products. The price of a pack of 20 cigarettes is now € 18.05.
  • E-cigarettes ( vaping ) Tax to be introduced from mid-2025 of 50 cent per ml of eliquid, bringing typical price of disposable device to €9.23 including VAT
  • Alcohol – no increases on beer spirits or wines

EDUCATION

Free schoolbooks for post primary and all secondary levels

  • 768 new teachers at a cost of € 15million will be recruited to support children with special needs and 1,600 new Special Needs Assistants (SNAs) costing € 18million will be recruited.
  • Exam fees for Junior and Leaving Certs to be waived
  • Hot meal programme to be expanded to all primary schools in 2025
  • The Student Contribution – previous €1,000 cut to third-level student registration fee is being extended into the new academic year
  • There is also an increase in the post graduate tuition fee contribution by €1,000 for student grant recipients.
  • There is also a “once-off” reduction of 33 per cent in the contribution fee for apprentices in higher education.

 

FOR FARMERS, FARMING AND THE AGRI-FOOD SECTOR

  • The flat rate scheme for farmers is raised from 4.8 to 5.1 per cent.
  • There will be an extension to 2027 of the general stock relief, stock relief for young trained farmers, stock relief for registered farm partnerships,

 

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