2023 budget

The 2023 Budget need-to-knows

The 2023 Budget was presented yesterday, Tuesday the 27th of September.  This is a little earlier than normal owing to energy inflation and the general increased cost of living.  The size of additional spending in the Budget will be an unprecedented €11 billion.  Our tax experts at Tax Return Plus have comprehensively reviewed the Budget and its implications for our clients.

As a valued client of Tax Return Plus we hope you will find the below summary informative in relation to your circumstances.

Top 5 Highlights from Budget 2023

  1. The 20% standard rate tax band will increase by €3,200, meaning a potential tax saving of €640 annually per individual.
  2. An increase of €75 for the Earned Income, Personal and Employee Tax Credit will represent a potential tax saving annually of €150 per individual.
  3. The increasing of the ceiling on the second USC rate band will result in a tax saving of €41 per year, for those who earn over €22,920.
  4. The Homecarer Tax Credit will increase to €1,700, resulting in a tax saving of €100.
  5. An introduction of a Rent Tax Credit of €500 for years 2022-2025.

How does the 2023 Budget affect you?

Irish Resident Landlords

In addition to points 1-4 mentioned above in our highlights section, Budget 2023 has seen a welcome increase in allowable pre-letting expenses from €5,000 to €10,000.  The required pre-letting vacancy period has also been reduced from 12 months to 6 months.

Budget 2023 has also seen the introduction of a Vacant Homes Tax for residential properties that are occupied for less than 30 days in a 12 month period. The tax will be self-assessed at three times the Local Property Tax charge. However, there will be exemptions to this charge such as refurbishment, listed for rent/sale or owner’s illness.

Non Resident Landlords

As mentioned in the Irish Resident Landlords section, changes to pre-letting and vacancy rules will also apply to Non-Resident Landlords.  In relation to points 1 – 3 from the Highlights Section, this will not benefit Non-Resident Landlords unless there is significant Irish based income.  In the case of USC, €22,920 and in relation to tax band changes, it will only apply to Irish based income over €36,800.

Employees availing of Share Benefit Schemes 

As per the highlights section above, you will benefit from the adjustment to the standard rate tax band, the increase of €75 for tax credits and the adjustments of the Universal Service Charge (USC) band. The total tax saving will be €831 per individual in 2023.

As per the Capital Gains Tax Section below, there has been no change to this tax head.  A point worth noting is that Revenue have explicitly noted that they will continue to investigate that all employees availing of Employer Share Benefit Schemes are fully tax compliant.

Once again, in relation to the complex area of share acquisition, there has been no update despite many stakeholders seeking changes for several years.

Relevant Contracts Tax (RCT)

As mentioned in item 1-3 in our highlights section above, RCT Sub Contractors will avail of increases to both the standard rate tax band and USC rate band. There is a further benefit owing to the increase in the Personal & Earned Income Tax Credit. These changes will result in a potential tax saving of  €831 to many workers in 2023.

Special Assignee Relief Programme (SARP)

This scheme has been extended to 31/12/2025 with an income threshold of €100,000 as opposed to the previous threshold of €75,000 for new entrants.

Temporary Business Energy Support Scheme (TBESS)

It is envisaged that many businesses will avail of this scheme over the coming months should energy prices continue to rise as expected.  The scheme will be administered by the Revenue Commissioners.  In summary, if energy bills are 50% higher in 2022 compared to the corresponding period in 2021, there will be a state support equivalent to 40% of the increase.  This support is capped at €10,000 per month.

Corporation Tax

There has been no change in the Corporation Tax rate of 12.5% in Budget 2023. There is continued discussion internationally around the proposed introduction of a 15% Corporation Tax rate.  Corporation Tax is expected to bring in around €20 Billion to the Irish Exchequer by the end 2022.

Capital Acquisitions Tax (CAT) & Gift Exemption

The annual personal gift exemption of €3,000 per individual gift has not changed and the tax rate for Capital Gains Tax remains at 33% The thresholds relating to inheritance and Gifts have also remained in line with previous years, having last been changed in Budget 2020.

Capital Gains Tax (CGT)

The annual personal gain exemption threshold remains at €1,270 and the CGT Rate of 33% has not been adjusted in Budget 2023.

Additional points of interest from the 2023 Budget

  1. A payment of €600 in total to offset the rising energy bills will be paid to every household in three instalments over the coming Winter months
  2. Childcare fees are to be cut by 25% next year, worth up to €2,106 and primary school books will be free from Autumn 2023.
  3. There will be a €1,000 reduction in third level fees in 2022/2023 academic year.  Families earning up to €62,000 will pay no more than €1,500 in third level fees from 2023 and there will be a double student grant in December 2022.
  4. Help to Buy scheme has been extended to the end of 2024.
  5. Expansion of GP Visit cards to bring the number of people eligible for the card to 430,000.
  6. Publicly funded IVF scheme to be phased in over the coming years.

For any queries on the 2023 Budget and how your taxes are affected, contact us today.