* PICTURED: John Burke, Armada, Caroline Dunlea, Core Optimisation, Gerard Ryan, Ryan Group and Fergal Cahill, Deloitte. Pic: Don Moloney
Budget 2024, billed as the most expensive Budget in the history of the State, was delivered by Minister for Finance, Michael McGrath, and Minister for Public Expenditure & Reform, Paschal Donohoe, on Tuesday, 10 October 2023. The Ministers announced an overall Budget package of €14bn with cost of living measures being a major focus and comprising €2.7bn of this year’s Budget package.
Fergal Cahill (Tax Partner, Deloitte) and his team held a Budget Breakfast Briefing on Wednesday, 11 October 2023 in the Old Ground Hotel, Ennis, where they were joined by a panel of Entrepreneurs, John Burke (CEO, Armada Hotel), Caroline Dunlea (CEO & Cofounder, Core Optimisation) and Gerard Ryan (Entrepreneur & Angel Investor). There was a fantastic turn out from the Mid-West business community to hear the detail and analysis of the Budget announcements from Fergal and his team, followed by an enlightening discussion with the panel of Entrepreneurs, who gave their insights on entrepreneurship in the Mid West and the impact of Budget 2024 on their respective businesses.
Pic: Don Moloney
Some of the key tax measures announced in Budget 2024 and detailed at the Budget Breakfast Briefing by Sinéad Dooley and Gerard Finucane (Tax Directors, Deloitte) included the changes made to income tax and USC; the focus on property in the Budget; and the impact of Budget 2024 on entrepreneurs and business owners. Given the current cost of living crisis, Fergal and his team also indicated that the measures which reduce the effective rate of income tax for individuals & families are welcomed.
Some of the key measures covered at the Breakfast Briefing included the following:
- The standard rate band for income tax (the amount of income that is subject to tax at the 20% rate) is to be increased by €2,000. This will mean that the first €42,000 of an individual’s income will be taxable at the 20% income tax rate.
- A number of tax credits (personal tax credit, employee tax credit, earned income credit, home carer tax credit and single person child carer credit) will be increased by €100. The incapacitated child tax credit will increase by €200.
- The 4.5% rate of USC will be reduced to 4%, the first reduction in this rate in five years. The 2% USC rate band has also been increased to €25,760. The exemption from the top rate of USC for medical card holders will also be extended to the end of 2025.
- The rent tax credit has been increased from €500 to €750 per year for 2024. The credit will also be extended to parents who pay for rental accommodation for their student children in rent a room properties or “digs” accommodation, with this change applying retrospectively for the years 2022 and 2023.
- Temporary one-year mortgage interest relief has been announced for homeowners who have a mortgage balance of between €80,000 to €500,000 on their primary dwellings on 31 December 2022. The relief will be available in respect of the increased interest paid on the mortgage in 2023 compared to the interest paid in 2022 at the standard rate of income tax (20%). The relief is capped at €1,250 per property.
- A new tax relief for landlords with one to two properties has also been announced, subject to the landlord retaining the property in the rental market for four years. With this tax relief, the following amounts of rental income will be disregarded at the standard rate of income tax: €3,000 for 2024, €4,000 for 2025 and €5,000 for 2026 and 2027.
- Some key farming reliefs that were due to expire at the end of the year have been extended and further measures to support farming families were announced, in particular the all-important Consanguinity Relief which reduces the rate of stamp duty from 7.5% to 1% on farm transfers between blood relations.
- The only change to Capital Acquisitions Tax (“CAT”) related to the extension of the Group B CAT threshold to foster children.
- A reduced capital gains tax (“CGT”) rate for “Angel Investors” of 16% (18% for partnerships) has been introduced for disposals, where certain criteria are met. This relief will apply to gains up to twice the value of the initial investment, subject to a lifetime limit of €3m. In order to qualify for this relief, the investor must acquire between 5% to 49% of the company and the investment must be held for a minimum period of three years.
- Retirement relief is a form of CGT relief which applies on the disposal of certain business assets and shares in certain companies by individuals aged 55 or over. Currently, there are no limits on Retirement Relief on a transfer to a child up to age 66 and a limit of €3m applies after age 66. The Retirement Relief limits for a transfer to a third party are €750,000 up to age 66 and this limit reduces to €500,000 where the individual is aged 66 or over.
Budget 2024 made some significant amendments to Retirement Relief. From 1 January 2025, the abovementioned age limits will increase from 66 to 70, however a new limit of €10m will also be introduced in respect of disposals of business assets to a child from age 55.
In light of the changes to Retirement Relief in 2025, Fergal and his team encouraged business owners to consider succession planning over the coming year, in advance of 31 December 2024.
For further detail on the measures introduced in Budget 2024, visit Deloitte’s dedicated Budget hub at https://lnkd.in/dswsD6dw and dedicated Tax calculator at Income Tax Calculator | Deloitte Ireland
Fergal Cahill is a Tax Partner in the Private Client tax team with Deloitte, Limerick. He joined Deloitte as a Partner in June 2022 following the successful merger of his Ennis-based tax advisory practice, Cahill Taxation Services.
Fergal has over 25 years of experience advising a broad range of clients including private business owners, high-net-worth individuals, and families on all aspects of their tax affairs. He has particular expertise in dealing with family business succession, business exits, corporate reorganizations, tax controversies, and property transactions.
