Budget 2024 Ireland | The Highlights

BLOG11th Oct 2023

Analysis and commentary from AAB’s team of tax experts, identifying the key changes and outlining the practical implications of the Budget 2024 Ireland for you and your business.

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Yesterday, Finance Minister Micheal McGrath unveiled the eagerly anticipated 2024 Budget in Ireland against a backdrop of economic and geopolitical uncertainty. Addressing concerns such as interest rate increases, inflation, and slower tax revenue growth in 2023, the Minister outlined several key highlights that will shape Ireland’s economic landscape moving forward.

The AAB Budget 2024 Ireland Guide will help you check the main changes that could impact you or your business. A summary of the key points are laid out below.

BUDGET 2024 IRELAND HIGHLIGHTS

Income Tax Changes

One significant announcement that will directly impact individuals is the increase in the entry point for the higher rate of income tax. The threshold has been raised to €42,000, allowing taxpayers to enjoy the 20% rate for income up to this amount.

Major New Funds

In a bid to harness windfall corporate tax receipts and prioritise sustainable development, Minister McGrath introduced two major funds. The first, the Future Ireland Fund, will be a savings fund geared towards strategic investments. The second, the Infrastructure, Climate, and Nature Fund, aims to provide ongoing support for infrastructure development and climate-related projects, particularly during economic downturns.

Agricultural Reliefs Extended

Recognising the significance of the agricultural sector, Minister McGrath extended several reliefs that were set to expire. These include

  • Consanguinity relief;
  • Accelerated capital allowances for farm safety equipment;
  • Young Trained Farmer Stamp Duty relief;
  • Stock relief for young trained farmers; and
  • Relief for succession farm partnerships.

Measures to Address Housing Crisis

The Budget also focuses on tackling the ongoing housing crisis in Ireland. The rental tax credit has been increased to €750 per year for 2024, providing relief to renters. Homeowners with outstanding mortgage balances on their primary dwelling between €80,000 and €500,000 as of December 31, 2022, will benefit from Mortgage Interest Tax Relief. Additionally, small landlords will receive temporary tax relief to alleviate their financial burdens.

Support for Cost of Living

To address the rising cost of living, the government has implemented several measures:

  1. The minimum wage will increase to €12.70 per hour starting January 1, 2024.
  2. Energy credits of €450 will be provided to assist with energy bills.
  3. Furthermore, a one-time “Cost of Living Support” payment will be granted to all qualifying Social Protection recipients in January.

BUDGET 2024 IRELAND KEY TAKE-AWAYS

The Budget 2024 Ireland also includes some key take-aways in relation to business taxes, income tax, and VAT.

Business Taxes changes include:

  • Next week’s Finance Bill will introduce legislation to implement the 15% minimum effective tax rate for large companies as per the OECD Pillar Two agreement.
  • The Research and Development (R&D) Tax Credit will increase from 25% to 30%, aiming to boost innovation.
  • Angel investors in innovative start-up SMEs will benefit from a targeted capital gains tax relief, making Ireland even more attractive for investment.
  • Retirement Relief for Capital Gains Tax will see enhancements from January 1, 2025, benefiting individuals from age 70 onwards.

Income tax changes include:

  • Income tax changes include an increase in the standard rate band to €42,000, meaning the top rate of income tax will only apply to income above this threshold.
  • There will also be an increase in personal tax credits, employee tax credits, and earned income credits, along with a reduction in the 4.5% rate of Universal Social Charge (USC) to 4%, marking the first reduction in USC rates in five years.
  • The rental tax credit will rise to €750 per annum for 2024.

VAT changes include:

  • The registration thresholds will be raised, with the service threshold increasing from €37,500 to €40,000 and the goods threshold from €75,000 to €80,000.
  • Additionally, the reduced VAT rate of 9% for electricity and gas will be extended for an additional 12 months, ensuring continued benefits for consumers.
  • Moreover, audio books will be subject to a zero rate of VAT starting from January 1, 2024.

These measures aim to stimulate economic growth, support industries, and ease the financial burden on individuals, ultimately shaping a more prosperous future for Ireland.