Michael McGrath, Minister for Finance and Paschal Donohoe, Minister for Public Expenditure & Reform delivered their Budget speeches in the Dáil at 1pm on Tuesday 10th October 2023.
With the wars in Israel and Ukraine raging, inflation high at 5.25% but slowing down, all eyes in Ireland were on the coalition government to see what respite and supports would emanate from Budget 2024. The Coalition announced a pre-election budget with spending increases and tax cuts worth more than €14 billion which will consist of a core expenditure package of just under €5.3billion, a tax package of over €1.1billion in line with the budgetary parameters set out in the Summer Economic Statement last July. There is also a package of once-off cost of living measures of €2.7billion, net of revenues from the energy sector while non-core expenditure will total € 4.75billion, including an additional € 250million for the public capital programme funded by windfall corporation tax receipts.
John Lowe of Money Doctors.ie reports….
Highlights at a glance…
- € 14billion was the total Budget package – including € 2.7billion cost of living
- A mortgage tax break worth up to € 1,250 for certain homeowners.
- € 1.40 increase in the national minimum wage to € 12.70 per hour
- Lower rate (20%) band for income tax will increase from € 40,000 annual income to € 42,000
- 3 energy credits of € 150 each – one before Christmas and two after it.
- Double payment of child benefit before Christmas ( € 280 ), and a double welfare payment after Christmas.
- All social welfare payments to rise by € 12 a week.
- The tax credit for renters from the current € 500 increased to € 750.
- The free schoolbooks scheme is to be extended to students in the first 3 years of secondary school.
- Government sources say there is agreement to reduce childcare fees by another 25 per cent but that it would occur “later” in 2024.
- The budget will also include the establishment of new savings funds where excess corporation tax revenues will be lodged.
- Excise duty on a packet of 20 cigarettes to rise 75c, bringing the price of 20 cigarettes to €16.75.
INCOME & OTHER TAXES
Income tax
- Standard rate of tax extended from € 40,000 to € 42,000 – an increase of € 2,000…
- Personal Tax Credit, Employee Credit and Earned Income Credit all set to increase by € 100 from € 1,775 to € 1,875
- The Home Carer Tax Credit will increase by € 100 to € 1,800
- The Single Person Child Carer Creditwill increase by € 100 to €1,750.
- The Incapacitated Child Tax Creditwill increase by € 200 to €3,500.
Pay Related Social Insurance (PRSI)
- ALL PRSI rates will increase by 0.1% from 1st October 2024
Universal Social Charge
- One change in the 2nd & 3rd bands
| 2023 | 2024 | |||
| First €12,012 | 0.5% | First €12,012 | 0.5% | |
| Next €10,908 | 2.0% | Next €13,748 | 2.0% (an increase of € 2,840) | |
| Next €47,124 | 4.5% | Next €44,284 | 4.0% (0.5% decrease) | |
| Balance | 8.0% | Balance | 8.0% |
- Self-employed with income over € 100,000 pays a rate of 11%
- If you are over 70 years of age and have income of less than € 60,000, the USC is only 2%
Corporation Tax
- Remains unchanged at 12.5% for companies with a turnover less than € 750million.
- 15% is still the Corporation Tax rate for those companies with a turnover exceeding € 750million.
Capital Gains Tax
- Remains the same @ 33%
Capital Acquisition Tax ( inheritance tax )
- Remains the same @ 33%
- The threshold for Group A category ( parent to child ) € 335,000
- Categories B € 32,500 & C € 16,250
- Rate remains @ 33% over the thresholds.
EXIT investment rates
- No change in the Budget speech in the exit tax rate of 41% on investments.
ENERGY & THE MOTOR INDUSTRY
- All domestic electricity customers will get € 450 off their electricity bills. The energy credit will be paid in 3 instalments of € 150. The first payment will be made in December 2023, the second will be made in January 2024 and the third will be made in March 2024.
- The temporary excise rate reductions on auto diesel, petrol and marked gas oil due to expire on 31 October 2023 will be extended until 31 March 2024.
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Fuel and electric vehicles – VRT relief ( up to € 50,000 value ) for battery electric vehicles (BEVs) is extended to the end of 2025.
- Benefit-in-Kind on EV cars
- The €10,000 deduction applied to Original Market Value Deduction for certain categories of vehicles is extended for 2024.
- Extension of EV tapering mechanism applied to BIK relief for Electric Vehicles of €35,000 to 31/12/2025, €20,000 in 2026 and €10,000 in 2027
- When the two extensions above are combined the 0% threshold for BIK on EVs will be:
- €45,000 in 2024 (the same as 2023)
- €35,000 in 2025
- €20,000 in 2026
- €10,000 in 2027
- Other motor related taxes
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- Excise on petrol/diesel – extension of reliefs due to expire on Oct 31st ..increase will now be – 50% on April 1st 2024; 50% on Aug 1st
- Accelerated Capital Allowances on EVS – extended for 3 years
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- Carbon tax will increase by € 7.50 per tonne from € 48.50 to € 56 from October 11th 2023 and will increase by the same amount in every budget until 2029. The increase will be applied to petrol and auto diesel from midnight on Budget night (from 11 October 2023). This increase will be applied to all other fuels from 1 May 2024.
- Transport
- Public transport fares – reduced fares of 20% on public transport will continue in 2024.
- The Young Adult Leap Card will be extended to people aged 19 – 25.
SOCIAL WELFARE BENEFITS
- ALL Social Welfare benefits increased by € 12 per week…
- A Christmas bonusof 100% will be paid in early December 2023 to people getting a qualifying social welfare payment.
Once off payments….
- Once-off payment of €200 to people getting the Living Alone Allowance
- Once-off payment of €300 to people getting Fuel Allowance
- Double payment of Child Benefit for each child ( € 280 )
- Once-off payment of €400 to people getting the Working Family Payment
- Once-off payment of €100 to people who get an increase for a qualified child.
- Double payment of Foster Care Allowance
- Once-off payment of € 400 to people getting Disability Allowance, Invalidity Pension, Blind Pension, Carer’s Support Grant
- Domiciliary Care Allowance increase by € 10 (you will get one payment only, even if you qualify for more than one of these payments or you are caring for more than one person).
Payments to families…
- Child Benefit double payment paid before Christmas ( € 280 ) while the payment is to be extended to 18-year-olds in full time education.
- The weekly rate for a qualified child will increase by €4 from €42 to €46 for children under 12 years of age. It will increase by €4 from €50 to €54 for children aged 12 years and over (from January 2024).
- The Working Family Payment thresholds will increase by €54 across all family sizes.
- Parent’s leaveand Parent’s Benefit will be extended by 2 weeks to 9 weeks from August 2024.
- The National Childcare Scheme will facilitate a 25% reduction in childcare costs from September 2024.
HEALTHCARE
- The Department of Health budget allocation is €22.5 billion.
€ 64 million is allocated for additional services for people living with a disability including:
- More than 90 additional residential places
- Further development of respite services
- 1,400 day places for people who have left school
- Increased personal assistance hours
- Increases in rates for staff
- Home supports
The Department of Health budget includes €1 billion for further COVID-19 spending including vaccinations, contact tracing and testing in hospitals.
HOUSING, THE HOMELESS AND OTHER SOCIAL HOUSING BENEFITS
- 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.
- 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 2025.
- Rental tax relief to tenants in their principal private residence of € 500 per annum increased to € 750 per annum and will benefit 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. This relief will be backdated for the 2022 and 2023 tax years.
- Further assistance to the housing market by way of introduction of a Rented Residential relief for landlords. The relief will apply at the standard rate as follows…
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- € 3,000 in the tax year 2024
- € 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 5 times the basic Local Property Tax (LPT)
SMALL & MEDIUM SIZED BUSINESSES
- VAT (Valued Added Tax)
- The 9% VAT rate on ebooks and audio books will be reduced to zero on 1 January 2024.
- The 9% VAT rate for gas and electricity is extended to 31st October 2024.
- 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 75c, with pro rata increases for other tobacco products. The price of a pack of 20 cigarettes is now € 16.75.
- Alcohol – no increases on beer spirits or wines
EDUCATION
Free exams and schoolbooks for post Primary/ Junior level
- The fee for State examinations will be waived.
- Free schoolbooks will be provided to Junior Cycle students from September 2024. Free school books are already provided at primary level.
- 744 new teachers will be recruited to support children with special needs and 1,216 new Special Needs Assistants (SNAs) will be recruited.
- The Student Contribution will be reduced by € 1,000 for students in the 2023/2024 academic year who qualify for the Free Fees Scheme. From September 2024, the student contribution fee will be abolished for all incomes under € 55,924.
- Maintenance grant rates will increase from January 2024.
- The Postgraduate tuition fee grant will increase by € 1,000 for students in the 2023/2024 academic year. Postgraduate students will also be eligible to apply for a maintenance grant under the Student Grant Scheme from September 2024 – a pro-rata increase will be available from January 2024.
- 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. This relief will be backdated for the 2022 and 2023 tax years.
OTHER ITEMS
- The Future Ireland Fundwill have 0.8% of GDP paid annually to the fund from 2024 to 2035 (approximately € 4.3 billion in 2024). The fund is estimated to reach around € 100 billion by 2035. It will be used to meet the costs of ageing, climate, digitalisation and other fiscal and economic challenges.
- The Infrastructure, Climate and Nature Fundwill grow by € 2 billion a year from 2024 to 2030. The € 14 billion fund will allow for investment in infrastructure and resources for capital investment in the event of economic downturns. It will also support climate and nature-related projects (€ 3 billion).
- The funds will both be managed by the National Treasury Management Agency (NTMA) and will require legislation.
· Supports for refugees from Ukraine
€2.5 billion will be provided for humanitarian support to refugees from Ukraine including accommodation, social welfare payments and education. Funding will also be provided for the Community Recognition Fund which supports community projects welcoming and hosting arrivals from Ukraine and other countries.
· Irish diaspora
Additional funding of €1.5 million has been allocated to the Emigrant Support Programme (ESP). This increases the total budget allocation for the ESP to €15.395 million in 2024, to support Irish community organisations around the world, particularly in areas with rising numbers of younger Irish citizens.
FOR FARMERS, FARMING AND THE AGRI-FOOD SECTOR
- 5 agricultural tax reliefs will continue…
- Young Trained Farmer Stamp Duty Relief
- Farm Consolidation Stamp Duty Relief
- Farm Restructuring Capital Gains Tax Relief
- Young Trained Farmer Stock Relief
- Registered Farm Partnership Stock Relief