Budget 2023 Summary

Posted in Budget

Below is a brief summary of the provisions announced in yesterday’s budget.

BUSINESS TAX

  • Temporary Business Energy Support Scheme: Applies to tax compliant trading businesses who have experienced a 50% increase in energy costs when comparing a 2022 billing period against the same period in 2021.The support will be 40% of the increase to a maximum of €10k per month.
  • Research and Development Tax Credit: Companies can now choose to have the first €25k of any claim refunded in year 1 – 3 years previously – or have the tax credit offset against other tax liabilities.
  • Knowledge Development Box: The 6.25% corporation tax rate extended to 31 December 2027.
  • Film Tax Credit: Extended to 31 December 2028.
  • Small Benefit Exemption: The tax free voucher scheme is increased from 2022 from €500 tax free per employee to €1,000. 2 vouchers can be given in any one year.
  • KEEP Scheme: Extended to 31 December 2025.
  • Foreign Earnings Deduction: Extended to 31 December 2025.
  • Special Assignee Relief Programme: Extended for 3 years to 31 December 2025 and limit for claiming has increased to €100k.

PERSONAL TAX

There were significant changes to the income tax bands and tax credits.

  • Income Tax Band – Increase of the 20% tax band by €3,200 (from €36,800 to €40,000 for a single person) with similar increases for couples.
  • Tax Credits – The general tax credits will increase from €1,700 to €1,775. These credits are:
  • Personal Tax Credit
    • Employee Tax Credit
    • Earned Income Tax Credit
  • Home Carer Credit: Increase by €100.
  • USC: An additional €1,625 will be subject to the 0.5% rate as opposed to the 2% rate to take minimum wage workers out of the higher USC rate.
  • 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 so couples will avail of a €1,000 tax credit.

COST OF LIVING ALLOWANCES ONCE OFF

  • Energy Payments (households): €600 per household paid in 3 instalments of €200 each directly to energy providers. The first payment will paid before Christmas and two further instalments in 2023.
  • Double Social Welfare: Double week cost of living payment in October for those in receipt of social welfare.
  • Double Child Benefit: Double child benefit payment in November.

PROPERTY

  • Vacant Property Tax – A new tax will apply to residential property which is occupied for less than 30 days in a 12 month period. The tax is expected to be 3 times that of LPT.
  • Help to buy Scheme – Extended until 31 December 2024 – this scheme is an incentive where first time buyers can claim a maximum of 10% of the value of the property or €30,000, whichever is lower.
  • Pre-Letting Expense Relief – 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 – this scheme allows for a limited refund of stamp duty paid on non-residential property when converted into residential property.
  • Living City Initiative: Extended to 31 December 2027 and can now be claimed over 7 years – previously 10.

VAT

  • Hospitality Sector (9% Rate) – The reduced rate will cease on 1 March 2023.
  • Oil & Gas (9% Rate): Extended to 28 February 2023.
  • Newspapers: Reduction in the VAT rate for print media including digital editions to 0% from 1 January 2023.
  • Farmers Flat Rate Scheme – Decrease from 5.5% to 5%.

MISCELLANEOUS

  • Cigarettes – Increased by 50 cents.
  • Alcohol – No change.
  • Old Age Pension: To increase by €12 per week.
  • Welfare Payments: To increase by €12 per week.
  • Child Care Fees: To reduce childcare costs by up to 25%.
  • College Fees: A once off reduction of €1,000 per college student for 2022/2023 year with a further €500 reduction for families earning under €100k.

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