Entrepreneur relief

• For sales of qualifying assets on or after 1 January 2026, the lifetime limit on gains that can qualify for relief will increase from EUR1m to EUR1.5m
• As the increased limit will apply to sales on or after 1 January 2026, there may be an incentive to stall transactions until 2026 when the new limit will apply
• The forthcoming detail in the Finance Bill in relation to the interaction with previous entrepreneur relief claims where the EUR1m threshold was exceeded will be of interest to some in the context of future transactions.

Supporting Investment

• The tax rate on Irish fund investments, equivalent offshore fund investments, life assurance policies and equivalent foreign life assurance policies will decrease from 41% to 38%
• A roadmap for simplification of the tax framework relating to the funds sector is due to be published early next year
• A new exemption from the 1% stamp duty charge on the acquisition of shares in Irish registered companies for companies traded on certain prescribed markets and with a market capitalisation below EUR1 billion
• The scope of the participation exemption for foreign dividends will be extended to apply to qualifying dividends received from jurisdictions that apply a non-refundable dividend withholding tax. Other changes will also be provided for in Finance Bill 2025
• An action plan has been published to reform Ireland’s tax regime for interest.

Supporting Households

• The 2% USC band will increase by EUR1,318 from EUR27,382 to EUR28,700 in 2026
• The reduced rates of USC for individuals who possess full medical cards and whose income is no more than EUR60,000 per annum will be extended to 31 December 2027. For these individuals the first EUR12,012 of income is subject to 0.5% USC with the balance subject to 2% USC
• The rent tax credit is being extended to 31 December 2028. The maximum credit will remain the same at EUR1,000 per single individual and EUR2,000 per jointly assessed couple
• Mortgage interest tax relief is being extended until 31 December 2026
• The 9% reduced rate of VAT on gas and electricity bills is being extended until 31 December 2030
• The EUR400 exemption from income tax on profits arising from the generation and supply of surplus electricity to the grid is being extended for a further 3 years until 31 December 2028.

Supporting Enterprise

• The Special Assignee Relief Programme (SARP) is being extended to 31 December 2030. From 1 January 2026, the minimum qualifying income for new entrants to the scheme will increase from EUR100,000 to EUR125,000
• The Foreign Earnings Deduction (FED) is being extended to 31 December 2030 and expanded to include Türkiye and the Philippines. From 1 January 2026, the maximum deduction will increase from EUR35,000 to EUR50,000
• The Key Employee Engagement Programme (KEEP) is being extended until 31 December 2028.

Supporting Housing

• The VAT rate on completed apartment sales reduces from 13.5% to 9%, effective from midnight 7 October until 31 December 2030
• From 8 October 2025, rental profits arising from homes which fall under the Cost Rental Scheme will be exempt from corporation tax
• An enhanced corporation tax deduction is being introduced for qualifying apartment construction costs, allowing a 125% deduction up to a cap of EUR50,000 per unit. It will apply to projects with commencement notices submitted on or after 8 October 2025 and on or before 31 December 2030
• The Residential Development Stamp Duty Refund Scheme which was due to close to new commencements in 2025 is being extended to 31 December 2030
• The income tax relief for retrofitting by landlords is being extended until 31 December 2028. The relief will also be available for the year in which the expenditure occurred, and the number of qualifying properties will increase from two to three
• Several changes were announced to the Living City Initiative including:
  • The extension of the scheme to 31 December 2030
  • An increase in the building age date of qualifying properties from 1915 to 1975
  • An increase of the maximum amount of relief from EUR200,000 to EUR300,000
  • The scope of the relief will be extended to include five new regional centres including Athlone, Drogheda, Dundalk, Letterkenny and Sligo
• A new derelict property tax will replace the existing derelict sites levy but this will not be legislated for until next year’s Finance Act.

Something for everyone

• Personal tax credits, employee tax credit and earned income credit all increased
• Increase of EUR2,000 bringing the income tax standard rate (20%) band to EUR44,000
• Increase of 2% USC band ceiling up to EUR27,382. USC rate of 4% reduced to 3%
• EII investments ceiling doubled from EUR500,000 to EUR1m (until end of 2026)
• Donations to sports bodies: individuals can choose to claim the tax relief rather than passing it to the organisation.

Gift and inheritance tax

• Parent/child Group A threshold to increase from EUR335,000 to EUR400,000 with effect from 2 October 2024
• Increases in thresholds for Group B (certain relatives) and Group C (others) to EUR40,000 and EUR20,000 respectively
• No change to 33% rate
• Agricultural relief: new test introduced:- land must be actively farmed by donor for at least 6 years prior to the gift/inheritance.

Pensions

• Standard fund threshold to rise from EUR2m to EUR2.8m by 2029 (EUR200,000 per year from 2026)
• Tax efficient pension lump sum to remain at EUR500,000
• No change announced to PRSAs but may be contained in next week’s Finance Bill.

Property related tax measures

• Rent tax credit to be increased from EUR750 to EUR1,000 (EUR2,000 per couple)
• New 6% residential property stamp duty rate on purchase price in excess of EUR1.5m with effect from tonight. The rate is still 1% on the first EUR1m and 2% on the next EUR500,000
• Stamp duty rate for bulk purchases of residential property increased from 10% to 15% where 10 or more units purchased in a 12-month period
• Vacant Homes Tax – annual charge increased from 5 times to 7 times the LPT charge for the property from November 2024.

Employee benefits

• Employee annual small benefit exemption extended from EUR1,000 to EUR1,500 per year and to include
• up to 5 benefits per year (previously 2)
• BIK exemption on provision of home EV chargers for directors/employees
• Company car tax break for first EUR10,000 of low emissions vehicles (EUR45,000 for EVs) extended a further year into 2025.

Retirement relief

• Last year’s announcement to introduce a cap of EUR10m for CGT retirement relief on transfers of businesses to children has been softened
• It appears that transfers by parents aged between 55 and 70 will still qualify for relief in excess of EUR10m but subject to a 12-year potential clawback if the business is sold (details to follow in the Finance Bill)
• From 1 January 2025 the EUR3m cap will apply to transfers after reaching age 70.

No changes announced to:

• Taxation of investment funds/ETFs (for now), but still under review
• Capital gains tax entrepreneur relief
• Tax residence rules
• Remittance basis for non-domiciled individuals
• 7.5% stamp duty on commercial property.

Tax News is a forum for sharing ideas and is not a substitute for formal tax advice. If you take, or do not take, action as a result of Tax News without formal advice from us, KTA can accept no responsibility for any loss, damage or distress.

Income taxes 2024

• Personal tax credit, employee tax credit and earned income credit all increased by EUR100 to EUR1,875
• Home carer credit increased by EUR100 to EUR1,800
• Single person child carer tax credit increased by EUR100 to EUR1,750
• Incapacitated child tax credit increased by EUR200 to EUR3,500
• Increase of EUR2,000 to EUR42,000 in the income tax standard rate (20%) band
• Increase of EUR2,840 in the 2% USC band ceiling
• USC rate of 4.5% reduced to 4%
• All PRSI rates to increase by 0.1% from October 2024.

Property – tax measures

• Rent tax credit to be increased from EUR500 to EUR750. The credit will now be available for parents who pay for their children’s student accommodation e.g. “digs”, rent a room
• For landlords a rented residential relief is being introduced. It will be a relief at the standard rate of tax (20%) on up to EUR3,000 for 2024, EUR4,000 for 2025 and EUR5,000 for 2026 and 2027. Clawback of the relief if property is removed from the rental market within 4 years
• Help to buy scheme extended to 31 December 2025
• Vacant Homes Tax (VHT) – annual charge increased to 5 times the LPT charge for the property for the year to 31 October 2024.

Capital taxes

Retirement relief

• From 1 January 2025 the age limit for the higher level of relief will be extended from 66 to 70. In addition, a new limit of EUR10m will apply for individuals up to the age of 70 for disposals to a child. Currently, there is a limit of EUR3m for disposals made to children by a parent aged 66 or above.

Angel Investors

• A new capital gains tax relief for Angel Investors in startups is to be introduced
• A tax rate of 16% for individuals (18% for partnerships) will apply to gains up to twice the level of the amount invested
• Must hold shares for 3 years and invest at least EUR10,000 for a shareholding between 5% and 49%

Entrepreneur relief

• No changes announced but a review of the relief to be undertaken

Mortgage Interest Relief

• A one year temporary mortgage interest relief scheme is being introduced in respect of loans on a main residence
• Tax relief at 20% (capped at EUR1,250 per property) on the increased mortgage interest paid between calendar year 2022 compared to calendar year 2023
• Only applies to loans with a balance between EUR80,000 and EUR500,000 as at 31 December 2022.

No changes announced to:

• Investment Fund Rates (41%). But the taxation of funds, including ETFs to be reviewed
• Gift/inheritance tax rates and tax free thresholds
• Capital gains tax rates
• Tax residence rules
• Remittance basis for non-domiciled individuals

REMINDER
Filing deadline for 2022 income tax returns is Wednesday 15 November 2023.

Tax News is a forum for sharing ideas and is not a substitute for formal tax advice. If you take, or do not take, action as a result of Tax News without formal advice from us, KTA can accept no responsibility for any loss, damage or distress.

Income taxes 2023

• Personal tax credit, employee tax credit and earned income credit all increased by EUR75 to EUR1,775
• Increase of EUR3,200 in the income tax standard rate (20%) band
• Home carer tax credit to increase by EUR100 to EUR1,700
• Increase of EUR1,625 in the 2% USC rate band ceiling.

Property – tax measures

• Help to buy scheme – extension to 31 December 2024
• Pre-letting expenses – increase in eligible expenditure limit from EUR5,000 to EUR10,000 and vacancy period cut from 12 months to 6 months
• Rent tax credit of EUR500 introduced for private tenants. Credit will be available for 2022 onwards
• Living City Initiative extended for 5 years until 31 December 2027
• Vacant Homes Tax (VHT) – to be introduced in 2023. It will apply to residential properties which are occupied for less than 30 days in a 12 month period
• The VHT will be 3 times the basic LPT charge for the property. Exemption for temporary periods of vacancy with genuine reasons.

Business and employment

• Key Employee Engagement Programme (KEEP) to be extended to 31 December 2025
• KEEP – lifetime company limit for shares raised from EUR3m to EUR6m
• KEEP – part-time employees now qualify and companies operating through a group structure – changes announced in 2019 but now brought into effect
• Both the Special Assignment Relief Programme (SARP) and Foreign Earnings Deduction (FED) will be extended for a further 3 years until 31 December 2025
• SARP – income threshold raised from EUR75,000 to EUR100,000
• Employers can now give employees one or two vouchers up to a combined maximum value of EUR1,000 each year.

There has been no change to:

• Capital gains tax rates
• The 10% entrepreneur relief tax rate and EUR1m threshold
• Gift/inheritance tax rates and tax free thresholds
• Stamp duty rates
• Employer and employee PRSI rates
• Investment fund rates (41%)
• Tax residence rules
• Tax rules for non-domiciled individuals
• The 12.5% corporation tax rate for companies with a turnover of less than
  EUR750m.

REMINDER
Filing deadline for 2021 income tax returns is Wednesday 16 November 2022.

Tax News is a forum for sharing ideas and is not a substitute for formal tax advice. If you take, or do not take, action as a result of Tax News without formal advice from us, KTA can accept no responsibility for any loss, damage or distress.

There has been no change to:

• Capital gains tax rates
• The 10% entrepreneur relief tax rate and EUR1m threshold
• Gift/inheritance tax rates and tax free thresholds
• Stamp duty rates
• Employer and employee PRSI rates
• Investment fund rates (41%)
• Tax residence rules
• Tax rules for non-domiciled individuals
• The 12.5% corporation tax rate for companies with a turnover of less than
  EUR750m.

VAT

• The temporary reduction in VAT rate from 13.5% to 9% on Tourism and Hospitality goods and services is extended to 31 August 2022.

Income taxes 2022

• Income tax deduction of 30% of the cost of vouched expenses for heat, electricity and broadband in respect of days spent working from home
• Personal tax credit, employee tax credit and earned income credit all increased by EUR50 to EUR1,700
• Increase of EUR1,500 in the income tax standard rate (20%) band
• Small increase of EUR608 in the 2% USC rate band ceiling
• Extension of the BIK exemption for electric cars to 2025 but with an element of tapering from 2023 onwards.

Other tax measures

• Accelerated capital allowances scheme for energy efficient equipment extended to 31 December 2024
• Help to buy scheme – extension of additional measures to 31 December 2022
• Pre-letting expenses – extension of additional measures to 31 December 2024
• Start-up exemption – corporation tax relief for certain start-up companies to be extended so that relief can be claimed for 5 years; an increase from 3 years.

Employment Investment Incentive Scheme (EIIS)

A number of changes are being introduced to the EIIS. The detail of these changes will be in the Finance Bill 2021.

• The scheme will be opened up to a wider range of investors
• The requirement that 30% of an investment must be spent before tax relief can be claimed will be removed
• Relaxation of penalties for investors redeeming capital.

REMINDER
Filing deadline for 2020 income tax returns is Wednesday 17 November 2021.

Tax News is a forum for sharing ideas and is not a substitute for formal tax advice. If you take, or do not take, action as a result of Tax News without formal advice from us, KTA can accept no responsibility for any loss, damage or distress.