Irish budget 2024 roundup

The Irish budget for 2024 was announced last month. A strong Irish economy has enabled the government to make generous spending promises and create two new funds to support future investment and general spending. Jordan Donald gives a roundup of the main points.

 

Irish budget 2024 announced

Tax increases in recent years have created a robust Irish economy and the country’s current economic resilience facilitated big spending packages in this year’s Irish budget.

In his first budget speech, Michael McGrath, Minister for Finance, announced support for individuals, families and businesses and investment in public services and infrastructure, including the largest home-building programme in decades. His spending package adds up to €14bn, with core spending and tax increases totalling €6.4bn.

Paschal Donohoe, the Minister for Public Expenditure and Reform, emphasised the strength of the Irish economy highlighting a public finance surplus, reduction of the national debt and record employment figures. He announced measures to support families in need through the cost of living crisis.

Here’s a roundup of some of the main announcements in this year’s Irish budget.

 

Tax

The Minister of Finance announced a personal income tax package of €1.3million. The main changes include:

• The Standard Rate tax band of 20% will rise by €2,000. The higher rate of income tax (40%) now applies to earnings over €42,000.
• Income tax credits will increase by €100 to €1,875. This applies to Personal, PAYE and Earned Income Tax Credits.
• The Universal Social Charge (USC) rate applied to earnings between €25,760 and €70,044 will reduce by 0.5% to 4%.
• From 1st January 2024, the national minimum wage will increase by €1.40 per hour to €12.70 per hour and the threshold for the lower 2% rate of the USC will increase by €2,840 to €25,760. The Irish government estimates that ‘A full time worker on the minimum wage will see an increase in their net take-home pay of approximately €2,300 on an annual basis’.

 

Cost of living package

A number of measures were announced to help those affected by the cost of living crisis caused by high interest rates and rising prices. These include:

• A 12-month extension of the lowered 9% rate of VAT on gas and electricity.
• Mortgage interest relief on outstanding mortgages for principal private residences between €80,000 and €500,000, capped at €1,250.
• Three energy bill credits of €150 for all households between now and April 2024.
• A number of lump sum payments for qualifying low-income households including €300 for recipients of the Fuel Allowance before the end of 2023, €200 extra to recipients of the Living Alone allowance and €400 for the Working Family payment.
• Welfare and pensions payments will increase by €12 per week for all.

 

Families and children

• Good news for families under the income threshold of €100,000 sending their children to university. Undergraduate fees will be halved from €3,000 to €1,500. Expat children may or may not benefit depending on which level of fees they qualify for, this is a complicated area so take a look at our article on fee status for Irish expatriates and their children here.
• Full-time undergraduate fees will be cut by €1,000 for all other families but again international students may pay higher fees.
• Child benefit will be extended to 18-year-olds in full-time education.
• Childcare costs are set to reduce by 25% from September 2024.
• Free schoolbooks for 210,000 Junior Cycle children in secondary school.
• Expansion of the hot school meals programme to an additional 900 primary schools.

 

Housing

• Rental tax credit to increase from €500 to €750, including for parents who pay for student accommodation for their child.
• Landlords will benefit from a tax break on rental income worth between €600 and €1,000. This will rise every year they stay in the market up to 2027.
• The Help-to-Buy scheme has been extended to 2025.
• Vacant property tax will increase from three to five times the rate of Local Property Tax. This measure could affect expatriates with empty homes. It applies to homes that are unoccupied for more than 30 days in a year.

 

Long-term investment

• The budget announced a new Future Ireland Fund (FIF). It aims to accumulate €100 billion from annual contributions of 0.8% of GDP annually from 2024 to 2035 (approximately €4.3 billion in 2024). This will be ringfenced to pay for pensions, healthcare and other costs after 2040. €4 billion in seed funding will also come from the National Reserve Fund.
• In addition, the government has announced an Infrastructure, Climate and Nature Fund with a target of €14 billion by 2030. An initial contribution of €2 billion from the National Reserve Fund this year will be followed by six further annual payments of €2 billion. An additional €3.15 billion will be put aside to work towards achieving carbon budgets through capital projects.

 

Health

• Core funding for healthcare will receive an €800 million boost but this is a small increase compared to the €1bn+ rises of recent years. This has been criticised as insufficient.
• A health resilience fund will be created to meet the pressures of rising demand and inflation. Details have not yet been announced.

 

Transport and climate

• Adults will continue to benefit from a 20% reduction in public transport fares for another year.
• Half-price fares on public transport will be extended to 24 and 25-year-olds.
• These two reductions combined add up to a 60% fare cut for those aged between
  19 and 25.
• The 0% VAT rate on the supply and installation of solar panels will be extended from private dwellings to schools.
• VRT relief for electric vehicles with a value up to €50,000 will be extended 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.

 

Business

• €250 million allocated to help SMEs struggling with high energy costs. It is expected to take the form of a one-off grant of up to 50% of their rates.
• Angel investors will benefit from a new tax break giving a reduced rate of Capital Gains Tax on qualifying investments for gains of up to twice the value of their investment.
• A 5% increase on the R&D tax credit to 30%.

 

This is not an exhaustive list of all the changes announced in the budget. For further information, check out Michael McGrath’s full speech here , and Paschal Donohoe’s here.

 

If you are an Irish expat in Asia concerned about any aspect of your financial planning, please feel free to get in touch with Jordan.