Tax package worth around €800 per person, a €12 weekly increase to welfare and pension payments, and mortgage interest rate tax relief announced
Minister for Finance Michael McGrath and Minister for Public Expenditure Paschal Donohoe have outlined a multibillion package of spending increases, once-off payments and tax cuts – here’s what we know.
Michael McGrath has announced a total spending package of €14 billion – core spending and tax increases of €6.4 billion, once-off measures of €2.7 billion and noncore expenditure of €4.75 billion.
Meanwhile, Paschal Donohoe announced measures including that all households will receive energy bill credits over the winter – three of €150 each up to April of next year, a €300 lump sum to recipients of the Fuel Allowance in the last quarter of this year, and an additional €200 this year to recipients of the Living Alone Allowance.
A personal tax package worth €1.3 billion worth about €800 to individual workers has been announced.
Personal, PAYE and earned income tax credits will increase by €100 to €1,875.
The Standard Rate Band – that’s the level at which earners begin to pay the higher rate of income tax – has gone up by €2,000 to €42,000.
The ceiling for the lower 2 per cent rate of Universal Social Charge will go up by €2,840, meaning it will apply on earnings up to €25,760.
The higher rate of USC applied to earnings above that level up to €70,044 will come down 0.5 per cent to 4 per cent.
The value of USC changes is €350 million next year, and €400 million in a full year.
The home carer and single person child carer tax credit is going up by €100.
The incapacitated child tax credit is increasing by €200.
The USC concession for those with a medical card earning less than €60,000 per year has been extended by two years to the end of 2025.
Welfare Recipients and Pensioners
There will be an across-the-board permanent increase to weekly welfare and pension payments of €12.
This will be supplemented by the normal Christmas Bonus paid in early December, and also a January Bonus payment to qualifying social protection recipients, as well as a range of lump sum payments, including:
€200 for the Living Alone Allowance.
€400 for the Carers’ Support Grant.
€400 for the Disability Support Grant, Blind Pension, Invalidity Pension and Domiciliary Care Allowance.
€400 for the Working Family Payment.
€300 for the Fuel Allowance payment.
€100 Qualified Child Bonus.
Families and Children
The Government is promising a further 25 per cent reduction in the cost of childcare, but this will not kick in until September of 2024. Meanwhile, there will be a double child benefit payment of €280 per child, which will be paid before Christmas, as will a double payment of the Foster Care allowance. Child benefit will be paid to parents of 18-year-olds still in full-time education.
Free schoolbooks will be introduced at Junior Cycle in secondary school, benefiting 210,000 children.
Families with an income of less than €100,000 will see college fees for undergraduates halved from €3,000 to €1,500 this year.
All other families will see undergraduate full-time student fees cut by €1,000.
Foster children will see their position on inheritances improved by being able to avail of the Group B Capital Acquisitions Tax threshold based on their relationship to their foster parents.
Fee waiver in place on school transport services for a further year, and an extension of the fee waiver for students sitting State exams.
Hot school meals programme to be expanded to a further 900 primary schools in April 2024.
Parents’ benefit will be increased to nine weeks from August next year.
Child Benefit payment extended to 18-year-olds in full-time education.
Price of a Pint, Cigarettes and Vaping
In a budget boost for tipplers, there will be no increase in the cost of a pint or bottle of wine.
A packet of cigarettes will go up by 75c.
A domestic tax on e-cigarettes and vaping products has been signalled for next year’s budget.
A once-off measure costing €125 million will be targeted at homeowners who have seen their payments increase sharply amid interest rate hikes designed to stave off inflation.
It will be for principal private residences only – ie, not rental properties – and there must be an outstanding mortgage balance of between €80,000 and €500,000 on December 31st, 2022.
The scheme will give 20 per cent tax relief on the increased amount of interest paid in 2022 compared to the calendar year 2023, capped at €1,250 per property, with approximately 160,000 people standing to benefit.
Paschal Donohoe has also flagged plans to provide a “payment, where necessary” through the Department of Social Protection to mortgage holders, with details to be worked out after the budget.
Housing, Landlords and Renters
The rental tax credit will be increased from €500 to €750.
Parents who pay for their student children in full-time accommodation will be able to claim the credit – this will be backdated to allow for claims in 2022 and 2023.
Landlords will benefit from a tax break worth between €600 and €1,000, rising every year they stay in the market, up to 2027. In the first year, €3,000 of income will be taxed at the standard 20 per cent rate rather than the higher rate (meaning €600 extra to the landlord), increasing to €4,000 in 2025 (a benefit of €800 in their pocket) and €5,000 for the subsequent two years (translating to the full €1,000).
The vacant property tax will be increased from three to five times the rate of Local Property Tax.
The Help-to-Buy scheme has been extended to the end of 2025 and reformed to ensure applicants for local authority affordable purchases can avail of Help-to-Buy.
The Residential Zoned Land Tax liability date has been extended by a year to allow for a review of maps and allow more engagement with the process.
Donohoe has announced three energy credits for households of €150 each to be paid between the end of this year and April of next year.
The lower 9 per cent rate of VAT on energy products will be extended by another 12 months.
Businesses, workers and farmers
There will be a €250 million package for small and medium firms designed to help with the costs of doing business. It is intended to be less cumbersome than previous schemes designed to moderate the impact of high energy costs, and it is expected businesses will receive a once-off grant worth up to 50 per cent of their rates.
A tax break for angel investors has been announced which will allow angel investors to benefit from a reduced rate of Capital Gains Tax when they dispose of a qualifying investment for gains up to twice the value of their investment.
The minimum wage will go up in January to €12.70.
The banking sector will be hit with an increased levy of €200 million – an increase of €113 million on last year.
The R&D tax credit will be increased from 25 per cent to 30 per cent.
The amount an investor can claim relief on for four-year investments under the Employment Investment Incentive Scheme has doubled to €500,000.
The upper age limit for retirement relief has been extended from 65 to 70 and the reduced relief previously available on disposals from age 66 will apply from age 70.
The Key Employee Engagement Programme will be extended to the end of 2025 and expanded.
The cap on projects eligible for Section 481 tax credit for filmmakers has increased from €70 million to €125 million.
Consanguinity relief will be extended for a period of five years, while accelerated capital allowances for farm safety equipment will be extended.
There will be more than €100 million in support for the beef and sheep sectors and €9 million more for tillage farmers, alongside higher rates of grants for new tanks for those importing slurry – designed to offset the impact of the ending of the nitrates derogation.
Additional €800 million in core funding being provided to the health service to meet the needs of an ageing and growing population. This is the smallest increase in funding for some time, following a run of €1 billion-plus rises over recent years.
Amount of money available for new measures, as opposed to providing the existing level of services, is just €100 million, down from €250 million in the last budget.
New health resilience fund is being established to meet the pressures caused by rising demand and inflation, but no details of this have yet been provided.
The 20 per cent cut to public transport fares for adults will be extended for another year.
The qualifying age for half-price fares on public transport will be increased to include 24- and 25-year-olds.
When added to the 20 per cent fare cut for adults, it means a 60 per cent fare cut for all people aged 19-25.
Climate and long-term investment
A new fund, the Future Ireland Fund, will be established with the potential to grow to €100 billion by the middle of the 2030s. It will be funded by contributions of 0.8 per cent of GDP annually from 2024 to 2035 – about €4.3 billion this year, alongside €4 billion in seed funding from the old Rainy Day/National Reserve Fund
Another €14 billion will be put aside in the Infrastructure, Climate and Nature Fund by 2030. It will be funded by €2 billion annually for seven years, beginning with a €2 billion contribution from the National Reserve Fund this year. Also, €3 billion will be put aside for helping to achieve carbon budgets through capital projects.
The personal income tax disregard for households selling residual electricity to the grid will double to €400.
VAT on the supply and installation of solar panels will be zeroed for installation on schools from January 1st, 2024.
Policing, Security and Justice
There will be funding for between 800 and 1,000 new Garda trainees and a 25 per cent increase in the Garda overtime budget to help address criminal justice complaints.
Training allowance for gardaí will rise to €305 from €184 per week, applying from budget day on, with payments coming on January 1st and backdated to today.
There will be funding for the first Garda reserve recruitment campaign since 2017 and €12 million for tackling domestic, sexual and gender-based violence.
Also, €9 million will be made available for increases in criminal legal aid fees of 10 per cent in 2024.
There will be an additional €21 million and €34 million in current and capital spending for defence, for a total of €1.23 billion, in line with commitments made on Defence Forces modernisation and on funding the first year of the Tribunal of Inquiry established by the Government.
There is a promise to provide a net 400 additional military personnel in 2024.
Budget provides for 740 additional teachers and 1,200 Special Needs Assistants.
Employees with an electric company vehicle will see an overall benefit-in-kind market value relief of €45,000 in 2024.
There will be an extension of the VRT relief for battery electric vehicles for another two years to the end of 2025.
The planned increase in fuel excise charges at the end of this month have been pushed back to two equal instalments on April 1st and August 1st, 2024.