Income Tax
A €3,200 increase in the standard Income Tax rate band means that the higher rate will only hit incomes of over €40,000 (single) or €49,000 (married). There is also a modest (€75) increase in the personal tax credit, employee tax credit and earned income tax credit, while the home carer tax credit has been increased by €100. By way of an example, Table A shows the impact this will have on an individual whose annual income is €45,000. An increase in the 2% USC rate band to €22,920 will ensure that individuals on the minimum wage continue to remain outside the top rate of USC.
| Individual type | Income | ^ in disposable income |
|---|---|---|
Single-Employee | €45,000 | €831 |
Married -Employee | €45,000 | €366 |
Single-self employed | €45,000 | €831 |
Married-Self Employed | €45,000 | €366 |
Measures to Support Business
Temporary Business Energy Support Scheme
The introduction of a Temporary Business Energy Support Scheme (TBESS) will enable qualifying businesses to claim up to 40% of the increase in their electricity or gas bills up to €10,000 per month. Subject to EU approval, this scheme will be backdated to September and will run until at least February 2023.
Small Benefit exemption
The value of the tax-free non-cash benefits which an employer can give to an employee is being raised from €500 to €1,000, and the number of benefits that an employee can receive is being increased from 1 to 2 per year. Many employers use this as a tax-efficient means to reward employees, e.g. by providing them with vouchers at Christmas.
Extension of SME reliefs
The following reliefs for SMEs are being extended to 31 December 2025:
Key Employee Engagement Programme
Foreign Earnings Deduction
Special Assignee Relief Programme
Section 481 Film Relief is being extended to 31 December 2028.
R&D and Knowledge Development Box
Finance Bill 2022 will introduce changes to the payment provisions for the R&D tax credit to align with new international definitions of refundable tax credits. The sunset clause of the Knowledge Development Box (KDB) will be extended for 4 years to accounting periods commencing before 1 January 2027. The KDB will have a new effective rate of 10%, to come into effect from a date to be set by commencement order.
Measures to Support Farmers
Slurry storage facilities
An accelerated capital allowance (ACA) will be available for the construction of slurry storage facilities so that 50% of expenditure can be claimed over two years.
Farm reliefs
The Young Trained Farmer Stock Relief and the Registered Farm Partnership Relief are being extended to 31 December 2025 while the following three reliefs are being extended to 31 December 2024:
Young Trained Farmer Stamp Duty Relief
Farm Consolidation Stamp Duty Relief
Farm Restructuring Capital Gains Tax Relief
Farm Succession
There are no changes to Capital Acquisitions Tax and Capital Gains Tax rates or bands in Budget 2023 however greater emphasis on wealth and asset-based taxes makes this is an area where business owners need to monitor developments.
Carbon Tax
An increase in the Carbon Tax rate from the current rate of €41 to €48.50 per tonne of CO2 will apply to auto fuels with effect from 12 October 2022 and all other fuels from 1 May 2023 however the impact of the increase will be offset with a reduction in the National Oil Reserves Agency (NORA) levy.
Housing
A new €500 tax credit for private renters and a self-assessed tax on vacant homes which are occupied for less than 30 days per year are among the measures being introduced in response to the housing crisis. There is also an increase in the eligible expenditure limit for pre-letting expenses for landlords to €10,000 with a halving of the vacancy period. The Help to Buy Scheme is being extended to 31 December 2024 and the Living City Initiative to 31 December 2027.
A new 10% levy on certain concrete products will add to the cost of new builds.
The zoned land tax, which was announced in last year’s Budget and introduced in the Finance Act, will see local authorities issue draft maps on 1 November 2022. Landowners with zoned land will be able to apply to the Local Authority to have it de-zoned.
Education & Childcare
Increased funding for child care will save qualifying parents approximately €175 per month while an allocation of over €50 million funding aims to provide free books for children at primary level.
Third-level students stand to benefit from a number of measures including:
once-off €1,000 reduction in the student contribution fee for higher education students eligible for the free fees initiative
once-off extra payment for all student maintenance grant recipients
once-off increase of €1,000 in the support to SUSI qualified Post Graduate students, increasing from €3500 to €4,500
further €8 million investment in the Student Assistance Fund for the 2022/23 academic year
Social Welfare
Financial supports to help pensioners, carers, people with disabilities and low income families cope with the cost of living include:
Double child benefit payment before year end
Carers and people with disabilities to receive a once-off €500 cost of living lump sum payment
Autumn Cost of Living Double Payment followed by a Christmas Bonus Double Payment
Welfare payments, including pensions, to increase by €12 per week
Expansion of the Fuel Allowance Scheme and a €400 lump sum payment to households receiving the Fuel Allowance payment in November
A once-off lump sum payment of €200 for people receiving the Living Alone Allowance
Changes to the Farm Assist Means Test from January 2023 to exempt income from Agri-Environmental Schemes up to €5,000
Finance Bill
This article summarises just some of the measures announced in the Budget on 27 September. Bear in mind that the technical details will only become clear when the Finance Bill is published later this year. In the meantime, for more information on how the Budget affects you and your business, contact your local ifac office.
Watch back our Budget 2023 Webinar
Our Budget 2023 webinar, in association with ASA and the Irish Farmers Journal, streamed live on 27th September 2022.
