A Recap of Budget 2023

September 30, 2022

A Recap of Budget 2023

Budget 2023 has been passed, and it’s no surprise that the government spent some time talking about the economy.

It’s always a subject that dominates the news for weeks prior to the announcements and with the effect of the last few years of the pandemic that is going on around the world and the economic downturn it definitely was one we hoped that we received good news.

So here are a few of the key points that we have taken from the announcements. 

The Standard Rate Cut-Off Point has been increased to €40,000, which means that an individual can now earn an additional €3,200 before having to pay tax at 40%. It represents the largest single increase in rate bands in over a decade and results in a direct tax saving of €640.

While not matching inflation, the personal tax credit, employee PAYE, and earned income tax credits have been raised by €75, and the USC threshold has been raised by 2%.

Renters also received a welcome relief with the reintroduction of the €500 rent credit for 2023 and subsequent years, which will also apply on a retrospective basis for 2022. 

While on the subject of housing, more good news for people trying to get onto the housing ladder, the help to buy scheme has been extended by two years and won’t expire until 31st December 2024. 

To help and assist with the housing crisis Landlords will now be able to claim €10,000 per premises in respect of pre-letting expenses. The premises must now only be vacant for a period of six month to qualify (reduced from 12 months) 

Property owners with unoccupied properties for less than 30 days will be subject to a vacant homes tax. Exemptions will apply to vacant residential properties due to "genuine reasons". Taxes will be charged at a rate three times what the property currently pays in basic local property taxes. 

Moving onto the business side of things, again with more business owners facing uncertain times it was a Budget to be watched . 

First of all, we should take note of the Temporary Business Energy Support Scheme (TBESS), which was created for the purpose of supporting trading businesses. Trading businesses will be able to claim a 40% refund on the increase in electricity and gas prices, subject to a monthly cap of €10,000 per trade (a total cap will also apply to the total amount refunded).

The 9% reduced VAT rate for electricity and gas has been extended to 28 February 2023. It was due to expire on 31 October 2022. 

Anyone in the tourism sector will not be pleased to hear that the minister did not extend the temporary VAT rate of 9% for certain goods and services in the tourism and hospitality sector beyond the current expiration date of 28 February 2023. From 1 March 2023,  VAT rate on these supplies will revert to 13.5%. The temporary 9% rate was introduced on 1 November 2020 to address the challenges facing the tourism and hospitality sectors due to Covid-19. The goods and services covered by the temporary 9% rate include supplies of certain food and beverages in the restaurant, take-away and catering sector; admission to certain attractions such as cinemas, museums, and exhibitions; hotels, guesthouses, and other short-term accommodations; and hairdressing services

The agricultural sector is always one that anxiously awaits budget results, as we know from many of our clients. Earlier this week, the government announced that farmers can claim tax relief on gains arising from the sale of farmland if the proceeds are reinvested in acquiring new farmland within 24 months after the sale. CGT relief is available when the purchase price of the new land exceeds the sales price of the old land, and partial relief is available when the sales proceeds exceed the purchase price. The relief has been extended until the end of 2025.

In addition, the minister has proposed an accelerated capital allowance scheme for the construction of new slurry storage facilities. This is to assist the agribusiness sector in adopting environmentally friendly farming practices. Farmers will now be able to write off capital costs incurred in building these facilities over two years instead of the usual seven. The new scheme is set to be introduced from 1 January 2023 and will run for three years.

Over the last week, the news headlines have been dominated by major announcements coming out of budget 2023. A €100 increase will be made to the home carer tax credit in order to support stay-at-home parents. Households will receive a €600 electricity credit. The first credit will be applied before Christmas. A once-off double payment will be made to social welfare recipients, including a payment for children's allowance and a €12 increase has been added to social welfare payments for qualifying adults, including pensions which will come into effect after Christmas of this year. 

Overall there are no major changes as a result of the budget that are going to make us financially better off but it is a step in the right direction. 

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