Introduction
The Minister for Finance introduced the 2024 Budget on 10 October 2023. Further detailed measures will be included in the Finance Bill to be published on 19 October 2023.
As has been the case in recent years, the substantial budget package of €14bn detailed by the minister was facilitated by strong tax receipts in the current year. Notwithstanding these strong receipts and a projected budget surplus in 2023 of €8.8bn, the overall budget package has been impacted by concerns regarding the vulnerability of corporation tax receipts. In this regard, the minister announced the establishment of the following two new funds to prepare for future challenges;
- The Future Ireland Fund to meet social and public expenditures; and
- The Infrastructure, Climate and Nature Fund to finance future capital projects.
The minister acknowledged the challenges faced by families and businesses due to the unprecedented inflation rates experienced in 2022 and 2023 and committed to the provision of further direct assistance to taxpayers to alleviate cost of living pressures.
Personal tax measures
To assist individuals and families, a number of tax measures were announced, including:
- An increase of the standard rate cut off point by €2,000 to €42,000;
- A reduction of the 4.5% rate of USC to 4% and an increase in the 4% USC rate entry threshold from €22,920 to €25,760; and
- Increases to various tax credits.
Housing-related measures
The minister emphasised the importance of tackling the housing crisis and supporting enterprise, which can be seen in a number of the measures announced including:
- The introduction of mortgage interest relief for certain home owners impacted by increased interest rates;
- The introduction of a measure of rental income relief at the standard rate for residential landlords;
- An increase of the rental tax credit from €500 to €750 per annum;
- Extensions to the Help-to-Buy scheme;
- The introduction of a new capital gains tax relief for angel investment in start-ups and an increase in the EII investment limit to €500,000; and
- An increase in the R&D tax credit from 25% to 30%.
Clarity and administration
Acknowledging the complexity of claiming tax reliefs, the minister has committed to
- a public awareness campaign to ensure that individuals and families claim their full entitlements; and
- the establishment of a dedicated group to identify opportunities to simplify and modernise the administration of business supports and reliefs.
Business tax
As expected, the minister confirmed that the upcoming Finance Bill will include legislation to give effect to the proposed 15% minimum effective rate of tax for companies/groups with revenues exceeding €750 million.
The minister also confirmed that a participation exemption for foreign sourced dividends will be legislated for next year following a consultation process. This should significantly simplify the repatriation of profits to Ireland.
Building on Budget 2024
While the incremental improvements to incentives supporting domestic entrepreneurship are to be welcomed, more can be done to increase the attractiveness of our personal tax regime to attract the mobile talent on which both domestic and multinational business are increasingly dependent.
It is hoped that the upcoming Finance Bill may contain additional measures on this front to ensure that Ireland remains the country of choice for foreign direct investment.
Queries? Get in touch
The measures announced in Budget 2024 will affect businesses and individuals across Ireland. If you have any queries on the impact of these changes for your business, please contact Tom Woods, Head of Tax.
We'd be delighted to hear from you.
Tom Woods
Partner, Head of Tax
KPMG in Ireland
