Income tax
- Income tax standard rate band to be increased by €2,000 to €44,000 with proportionate increases for single person child carers, married couples and civil partners.
- The Personal Tax Credit, Employee Tax Credit and Earned Income Credit will all be increased from €1,875 to €2,000.
- Increases in various tax credits including the Home Carer Tax Credit (from €1,800 to €1,950), Single Person Child Carer Tax Credit (from €1,750 to €1,900), Incapacitated Child Tax Credit (from €3,500 to €3,800), Blind Tax Credit (from €1,650 to €1,950) and an increase in the Dependant Relative Tax Credit from €245 to €305.
- Rent Tax Credit increased for tax year 2024 from €750 to €1,000 per year (now €2,000 for a jointly assessed couple).
- Various amendments to the USC including an increase in the 2% USC rate band from €25,760 to €27,382 and a reduction in the 4% USC rate band to 3%
- Various farming related tax reliefs to be extended including enhanced stock relief for registered farm partnerships, stock relief for young trained farmers and general stock relief. Change will also be made to agricultural stamp duty reliefs.
- Mortgage interest relief and the Help to Buy scheme have both been extended.
- The proposed tapering of BIK relief for electric vehicles has been deferred.
- The small benefit exemption from BIK has been amended to allow for up to five non-cash benefits annually with a cumulative annual limit of €1,500.
- Measures will be introduced in the Finance Bill to allow tax relief for donations made to sports bodies in certain circumstances.
Business tax
- A new participation exemption for foreign sourced dividends from EU/EEA and tax treaty jurisdictions will be introduced with effect from 1 January 2025. Work is also ongoing to develop a potential foreign branch exemption in the future.
- Increase in the first-year payment threshold privded for in the Research and Development (R&D) regime from €50,000 to €75,000.
- Introduction of a corporation tax deduction for listing expenses of up to €1m relating to the first listing on an Irish/EEA stock exchange. Work is also ongoing to introduce a stamp duty exemption for SMEs who access equity via financial trading platforms, subject to State Aid approval.
- The existing Bank Levy will be extended for a further year with a target yield of €200m.
- Engagement with stakeholders over the next number of months noted in relation to the tax treatment of interest deductibility in Ireland, with the stated aim of reducing complexities associated with the current interest deductibility regime.
- Reduction in Motor Insurers Insolvency Compensation Fund Levy from 1% to 0%.
- The review of the funds sector which was announced last year has concluded and the findings are due to be published shortly. The next steps are expected to be outlined once the report has been given due consideration.
- Start-up relief for new small companies, which provides for a reduction in corporation tax payable, has been enhanced to ensure relief is also now available to small owner-managed companies.
- CO2 emission thresholds will be adjusted downwards from 1 January 2027 in the context of capital allowances on business cars.
- Enhancement to reliefs available to the audio-visual sector.
Property
- The rate of stamp duty for bulk purchases of residential properties is being increased from 10% to 15% with immediate effect.
- The rate of stamp duty for high value residential properties is being increased. The current rates of 1% and 2% will remain in place for amounts up to €1 million and over €1 million respectively. A new rate of 6% is being introduced which will apply to amounts exceeding €1.5 million, subject to transitional arrangements for transactions in process.
- The rate of the Vacant Homes Tax is being increased from five times the property’s existing base rate of Local Property Tax to seven times the base rate, commencing this November.
- A exemption will be available from Residential Zoned Land Tax (RZLT) for landowners who seek to have their land rezoned to reflect certain activity carried on by them on the land.
- Relief for certain pre-letting expenses for landlords is being extended for a further three years, to now expire at end of 2027.
Capital gains tax
- The CGT relief for angel investors in certain innovative start-ups which was announced last year is now being enhanced by increasing the lifetime limit on gains to which relief applies from €3 million to €10 million.
- The extension of the upper age limit to 70 in the context of Retirement Relief is being retained. Changes are also being made to provide for a clawback where there are disposals by the child or children above €10 million within 12 years of receiving the assets. Where the child or children retain the assets for more than 12 years, CGT will be fully abated.
- The EII scheme, Start-Up Relief for Entrepreneurs and the Start-Up Capital Incentive schemes are to all be extended for two years up to the end of 2026. The EII scheme is also being enhanced by doubling the amount in respect of which an investor can claim relief from €500,000 to €1 million. The amount of relief available under the Start-Up Relief for Entrepreneurs is also being increased, with the limit being increased from €700,000 to €980,000.
Capital acquisitions tax
- Increase in lifetime thresholds across each relationship categoty as follows:
- Group A; From €335,000 to €400,000
- Group B; From €32,500 to €40,000
- Group C; From €16,250 to €20,000
- The scope of agricultural relief will be narrowed so that the donor will now need to meet a six year active farmer test in order for the beneficiary to benefit from agricultural relief.
Indirect tax
- Temporary 9% VAT rate currently applicable to supplies of gas and electricity extended for an additional 6 months to 30 April 2025.
- Increase in VAT registration thresholds to €85k and €42.5k in relation to the respective supplies of goods and services from 1 January 2025.
- Flat-rate addition for farmers to increase from 4.8% to 5.1% from 1 January 2025.
- 9% VAT rate to apply to the installation of certain heat pumps.
- Excise duty on a packet of 20 cigarettes to be increased by €1 with a pro-rata increase on other tobacco products from midnight on 1 October. A new tax on e-cigarettes and vaping products to be introduced during 2025.
- Excise relief for independent small producers of cider and perry to be extended to cover additional products.
- VRT rate of €200 to apply to certain commercial battery electric vehicles. VRT rate applicable to certain other commercial vehicles to be based on CO2 emission levels.
- For Carbon Tax purposes, the rate per tonne of carbon dioxide emitted will increase from €56 to €63.50 from 9 October in respect of petrol and diesel and from 1 May 2025 in respect of other fuels.
Get in touch
The measures unveiled in Budget 2025 will have far-reaching implications for businesses across Ireland. If you have any enquiries, comments, or wish to explore further, we are here to assist.
Contact any member of our Tax team today.
Tom Woods
Partner, Head of Tax
KPMG in Ireland
+353 87 744 2589 Tom
Woods
Phone number
Brian Brennan
Partner
KPMG in Ireland
+353 87 744 2145 Brian
Brennan
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