The Irish Budget 2023 – what does it mean for you?

Tax cuts, property measures, VAT, business taxes, one-offs and cost-of-living, agricultural, motor, climate change and more.

Tax Cuts / Personal Tax

The following changes were made to the income tax bands and credits. This will give a single person earning €40k per year an extra €815 in their pocket or €1,630 per couple. This is achieved by:

Income Tax Band: Increase the 20% tax band by €3,200 (from €36,800 to €40,000 for a single person). This gives everyone earning at least €40,000 an extra €640 per year. There are pro rata increases for couples.
Tax Credits: The general tax credits will increase from €1,700 to €1,775. This gives most people an extra €150 per year (regardless of whether you are self-employed or an employee). These credits are:
- Personal Tax Credit
- Employee Tax Credit
- Earned Income Tax Credit
Home Carer Credit: Will increase by €100.
Married Couple or Civil Partnership Tax Credit: The married couple or civil partner tax credit will be increased by €150 from €3,400 to €3,550
USC: An additional €1,625 will be subject to the 0.5% rate as opposed to the 2% rate. This will save the average worker €24 per year and is aimed at taking minimum wage workers out of the higher USC rate.
Medical card holders will continue to avail of the reduced rate of USC where their income is below €60,000.
Rent Tax Credit: Renters will be entitled to a rental credit of €500 per year for 2022 onwards. This will be paid on a per person basis and therefore, couples can avail of a €1,000 tax credit.

Property Related Measures

Vacant Property Tax: A new tax will apply to residential property which is occupied for less than 30 days in a 12 month period.
Help to buy Scheme: Extended in its current form until the end of 2024 (max €30k).
Pre-Letting Expense Relief: Improvement to the scheme for landlords. This relief allows a landlord claim a tax deduction for pre-letting expenses of up to €10,000 (previously €5,000) per unit where the premises has been vacant for at least 6 months (previously 12 months) before letting.
Residential Development – Stamp Duty Refund: Extended to 31 December 2025. The scheme allows for a refund of stamp duty paid on non-residential property when converted into residential property. The refund is from 7.5% to 2%.
Living City Initiative: Extended to 31 December 2027, and can now be claimed over 7 years as opposed to 10.

VAT

Hospitality Sector (9% Rate) – It was confirmed that the reduced rate will cease on 1 March 2023 and increase back to 13.5% after this date.
Oil & Gas (9% Rate): Extended to 28 February 2023. This was due to expire 31 October 2022.
Farmers Flat Rate Scheme: Decrease from 5.5% to 5%.
Hormone and Nicotine replacement therapies: Reduced to zero rate along with a number of period products which were still at 9%.

Business Taxes

Temporary Business Energy Support Scheme: This is one that will get all the attention. Applies to trading businesses who are tax compliant and have experienced a 50% increase in gas and electricity costs when comparing a billing period in 2022 against the same period in 2021. The support will be 40% of the increase in cost, up to a maximum of €10k per month. Interesting the scheme will need to be approved by the EU commission in advance of any payments being made. Our understanding is that if a business paid €10,000 in energy costs in November 2021 and the bill increased to €16,000 for November 2022, Revenue would cover 40% of the increase (i.e. €2,400).
Research and Development Tax Credit (R&D): There has been a significant improvement to the R&D tax regime whereby companies can now choose to have the first €25k of any claim refunded in year 1 (as opposed to 3 years) or have the tax credit offset against other tax liabilities.
Knowledge Development Box (KDB): Extended to 2027. The scheme provides a special 6.25% corporation tax rate on intellectual property developed in Ireland.
Small Benefit Exemption: The tax free voucher scheme is increased from €500 tax free per employee to €1,000. 2 vouchers can be given in any one year. This will apply from 2022.
KEEP Scheme: Extended to December 2025.Some decent improvements here including that companies can now buy back KEEP scheme shares. and the lifetime company limit has increased from €3m to €6m.
Foreign Earnings Deduction (FED): Extended for 3 years to December 2025. The scheme provides relief from income tax for employees in Ireland who travel to developing nations to temporarily carry out duties of employment.
Special Assignee Relief Programme (SARP): Extended for 3 years to December 2025. Limit for claiming has increased from €75k to €100k. The scheme provides income tax relief for high net worth individuals relocating to Ireland to carry out duties of employment.

One-Off Cost of Living Allowances

Energy Payments (households): €600 per household paid in 3 instalments of €200 each. This will be paid directly to electricity providers. The first payment will paid before Christmas and two further instalments in the new year.
Double Social Welfare: Once off double week Cost of living payment for all those in receipt of social welfare. To be paid in October.
Christmas bonus will still be paid in early December for social welfare recipients.
Double Child Benefit: Double Child benefit payment to be paid in November.

Agricultural measures

Stock Relief: Extended to December 2024.
Young Trained Farmer Relief (stamp duty): Extended to December 2025.
Accelerated Capital Allowance Scheme: New scheme to assist with farmers who build energy efficient slurry facilities.
Farm Consolidation Relief (Stamp Duty): Extended to December 2025.
Farm Restructuring Relief (CGT): Extended to December 2025.

Motor Tax / Climate Changes

Carbon Tax: Increase of €7.50 per tonne from €41 to €48.50 per tonne. The increase will take effect for auto fuels from 12^th October, with the other fuels from 1 May 2023 after winter heating season.
National Oil reserves Levy has been abolished – equates to 2c per litre of vehicle fuel. This will offset the increase in carbon tax (see above).
Concrete Blocks Levy: There will be a new 10% Levy placed on the use of concrete in construction from April 2023. This will assist with payment of the redress scheme.

General

Cigarettes: Increased again by 50 cents. A packet of 20 cigarettes is now roughly €15.50.
Alcohol: No increase in the price of a pint or a glass of wine.
Pension: The old age pension will increase by €12 per week.
Welfare Payments will increase by €12 per week.
Childcare Fees: Aim to reduce childcare costs by up to 25%. This will result in a €175 per month or €2,106 per year paid to parent.
College Fees: A one-off reduction of €1,000 per college student for 2022/2023 year. There will be a further €500 reduction for families earning under €100k.
Licence Fee Reduction: 50% cut in the cost for of a special exemption order from €110 to €55. This is to support the night time economy.
Microbrewery Relief: Production threshold is being increased by 50% to allow microbreweries expand.
Banking Levy: Extended by 1 year to the end of 2023.

Looking for financial advice on how to make the best of the Budget 2023?

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