Budget 2025
1 October 2024
EXECUTIVE SUMMARY
Minister for Finance Jack Chambers and Minister for Public Expenditure Pascal Donohoe delivered the final Budget of this Government’s term on the back of a €23.7bn surplus in exchequer funds, boosted by a €14bn windfall from the Apple tax case. Tax revenues are forecasted at €105.7bn for the year. Budget 2025 will contain measures totalling €10.5bn as follows:
-€1.4bn in net taxation package
-€6.9bn in expenditure package
-€2.2bn in cost-of-living package
The cost-of-living crises was again a major factor in the Budget and featured heavily throughout as was the easing of the tax burden on middle-income earners.
An extensive €3bn capital infrastructural spending programme was announced:
-€1bn in Irish Water non-domestic capital spending
-€1.25bn made available to the Land Development Agency
-€0.75bn in electricity grid infrastructure
Inflationary pressures have eased considerably from 10% to around 2% at present with the economy operating at near full employment.
Despite considerable pressure from the hospitality industry, there will be no reduction in the VAT rate from 13.5% to 9%.
The Finance Bill will provide for the taxation of the Automatic Enrolment Retirement Savings Scheme (Pension Auto-Enrolment). As the State is making a direct contribution for employees within the scheme, there is no tax relief being provided for employee contributions to the scheme. The scheme is currently scheduled to begin in September 2025.
HOUSING
Landlords
Pre-letting expenses relief will be extended for a further 3 years to 31 December 2027.
Vacant Homes Tax
VHT is a self-assessed tax that applies to habitable residential properties that have been occupied for less than 30 days in a 12-month chargeable period, from 1 November to 31 October of the following year. The VHT rate for chargeable periods from 1 November 2024 onwards has been increased to 7 times (previously 5 times) a property’s existing base Local Property Tax liability.
Help-to-Buy Scheme
The HTB Scheme has been extended to 31 December 2029.
Stamp Duty
SD rate increased from 10% to 15% where 10 or more houses are acquired in any 12-month period effective from 02 October 2024.
A 3rd rate of SD on residential properties where the value / acquisition price exceeds €1.5m.
•Property up to €1m 1%
•From €1m – €1.5m 2%
•Value exceeding €1.5m 6%
Residential Zoned Land Tax (RZLT)
An annual tax of 3% of the value on land both zoned for residential development and which necessary services are in place to develop housing.
There is an opportunity for landowners to seek a change in zoning in 2025 to a zoning which reflects the economic activity the undertake on the land.
PERSONAL TAX
Tax Credits
The following tax credits have been increased for 2025:
•Personal tax credit €2,000
•Employee tax credit €2,000
•Earned Income credit €2,000
•Home Carer credit €1,950
•Single Person Child Carer credit €1,900
•Incapacitated Child credit €3,800
•Dependent Relative credit € 305
•Blind tax credit €1,950
•Rent tax credit €1,000
Standard Rate Cut Off Points
The following are the new cut off points for 2025:
•Single, widowed or surviving partner withoutqualifying child €44,000
•Single, widowed or surviving partner withqualifying child €48,000
•Married, civil partnership, one person withincome €53,000
•Married, civil partnership, both persons withincome €53,000 with a max.
increase of €35,000
USC
The new USC thresholds and rates for 2025 are as follows:
•Income up to €12,012 0.5%
•Income from €12,012
up to €27,382 2.0%
•Income from €27,383
up to €70,044 3.0%
•Income above €70,044 8.0%
•Self-employed income
over €100,000 3.0% surcharge
COST OF LIVING
Mortgage Interest Relief Credit
This credit is being extended for 1 more year. Qualifying homeowners with an outstanding mortgage balance of between €80,000 and €500,000 as of 31 December 2022 will be eligible for the relief in respect of interest paid in 2024 relative to the interest paid in 2022.
Rent Tax Credit
Rent tax credit to increase to €1,000 from €750, and €2,000 for jointly assessed couples for 2025.
One-off cost of living supports
•2 x €125 electricity credits
•2 x double month child benefit payments
•€200 Living Allowance lump sum
•€400 Working Family Payment lump sum
•€100 Qualified Child Increment lump sum
The reduced 9% VAT rate for gas and electricity will be extended for 6 months to 30 April 2025.
Minimum Wage
The national minimum wage will increase by €0.80 to €13.50 per hour from 01 January 2025.
Social welfare
•€12 increase in the weekly main rates
Excise Duty
•Pack of cigarettes increased by €1
•E-cigarettes on liquid 50 cent per ml
Carbon Tax
The rate per tonne for petrol and diesel will increase from €56 to €63.50 from 09 October 2024 and on all other fuels from 01 May 2025.
Education
•Free schoolbooks for all secondarystudents
•Temporary reduction of €1,000 in studentcontribution charge
BUSINESS
Company cars
The temporary reduction of €10,000 applying to the original market value (OMV), to reduce the amount of BIK payable, for all cars in Category A, B, C and D (not E) and all vans is being extended to 31 December 2025.
A BIK exemption where employers incur an expense in connection with the provision of electric charging of vehicles at the home of an employee.
Capital allowances on company cars will be amended based on CO2 emissions.
Small Benefit Exemption (tax free vouchers)
The current scheme of €1,000 of non-cash benefits from an employer to an employee will increase to €1,500 and this can be paid over 5 transactions (previously 2).
Research & Development (R&D) Tax Credit
An increase from €50,000 to €75,000 in the amount of the credit payable in Year One.
VAT
With effect from 1 January 2025, the turnover thresholds beyond which suppliers are obliged to register for VAT will rise:
•For a supplier of goods, the new thresholdwill be €85,000, up from €80,000.
•For a supplier of services (or mixedsupplies), the new threshold will be €45,000,up from €40,000.
Participation Exemption
A scheme to simplify existing double taxation relief provisions on foreign dividends.
Relief for Listing Expenses
Relief for expenses incurred on an initial stock market listing. The deduction will be for expenses incurred wholly and exclusively on a first listing (IPO) on a recognised stock exchange in Ireland or EU/EEA area with a cap of €1m.
AGRICULTURE
Flat-Rate Addition for Farmers
The flat-rate addition for farmers will be increased to 5.1% to 4.8%, with effect from 1 January 2025.
Acceleration of Wear and Tear Allowances for Farm Safety Equipment
The scheme of accelerated allowances is to be broadened to allow for relief in respect of expenditure by farmers on certain Targeted Agriculture Modernisation Scheme (TAMS) eligible safety equipment not currently supported.
Agricultural relief
As an additional condition for this relief, the donor must satisfy the 6-year Active Farmer test in order for the beneficiary to benefit from the relief.
Stock Relief
The following 3 stock relief schemes are being extended for a further 3 years to 31 December 2027:
•General stock relief
•Young Trained Farmer Stock Relief
•Stock Relief for RegisteredFarm Partnerships
CAPITAL TAXES
CGT
Retirement Relief
A 12-year clawback period will apply on relief available for disposals over €10m. Further details will be released in due course.
Angel Investor Relief
This scheme was announced in last year’s Budget and will commence shortly. This Budget will increase the lifetime limit on gains, on which the reduced rate of CGT applies, from €3m to €10m.
Relief for Investment in Corporate Trades
The following scheme’s will be extended for a further 2 years to 31 December 2025:
•Employment Investment Incentive (EII)
•Start-Up Relief for Entrepreneurs (SURE)
•Start-Up Capital Incentive (SCI)
The limit on the amount that an investor can claim relief on for EII investments will be increased from €500k to €1m.SURE investments relief will increase to a maximum of €140k per year (€980k over 7 years).
Section 486C Start Up Relief
Relief extended to include up to €1,000 of Class S PRSI per individual to count towards the overall relief of up to €40k.
CAT
The increased group thresholds are as follows:
•Group A – €400,000 (+€40,000)
•Group B – €40,000 (+€7,500)
•Group C – €20,000 (+€3,750)