Ireland | Employment Tax | Budget 2024

10 October 2023

Employment Tax

Budget 2024

Key measures impacting both employers and employees

Similar to last year, Budget 2024 is primarily a ‘cost of living’ budget.

Mindful of inflation and the need to manage windfall income carefully, the focus has been on one-off measures rather than significant permanent changes.

Overall, the Government has delivered a prudent and measured budget, in what might be the last budget before the next general election.

Key measures impacting both employers and employees

• Extension of the benefit-in-kind (BIK) relief of €10,000, up to 31 December 2024, that currently applies to the Original Market Value (OMV) for certain categories of company cars provided to employees.
• Extension of the tapering mechanism applied to calculating the BIK for Electric Vehicles provided to employees, maintaining the €35,000 OMV Deduction to the end of 2025, €20,000 to the end of 2026 and €10,000 to the end of 2027.
• Social security (PRSI) increase of 0.1% per annum in all categories from 1 October 2024 onwards.^* Increase in the minimum wage by €1.40 to €12.70 from 2024.

* Further details are anticipated in the forthcoming Social Welfare Bill.

Other announcements

• A public consultation will be launched on Share Based Remuneration, given its increased importance in attracting and incentivising global workforces.
• Revenue will also continue with targeted compliance management activities in 2024, specifically noting the area of payroll and expenses reporting.
• Funding was announced for a public information campaign by Revenue to highlight the range of tax credits and reliefs available to taxpayers.

Key measures impacting individuals

• An increase of €2,000 to the standard rate income tax band, meaning that individuals will not have to pay the higher rate of tax (40%) on any earnings below €42,000.
• Increases of €100 each to the personal, employee and earned income tax credits.
• A reduction in the 3rd rate of Universal Social Charge (USC) from 4.5% to 4%, with an increase in the ceiling for the 2% USC rate to €25,760.
• The rent tax credit in respect of a principal private residence is being increased from €500 to €750.
• As part of the package of one-off cost-of-living measures, the Government announced three separate energy credits of €150 each, which will be paid between now and Spring 2024.

Other measures impacting individuals and targeted groups

• Social welfare benefit payments increased by €12 per week.
• Reduction in childcare fees by a further 25% from September 2024.
• Other education supports including a free school book scheme up to Junior Certificate year and a reduction in the student contribution to third level fees of €1,000.
• The Help to Buy Scheme will be extended to 31 December 2025.
• A once off mortgage interest relief payment for certain homeowners, capped at €1,250.
• A tax saving for certain landlords over the course of 2024 to 2027. Landlords must remain in the rental market for these four years to avoid clawback of such relief.

More tax changes to come?

Given the number of climate change initiatives, there was no mention of the removal of car parking BIK exemption or an update on the urban car parking levy. We will await the draft Finance Act, where these may be addressed.

While not mentioned in the Budget, the Department of Finance has confirmed they will carry out a review of the remittance basis of taxation in 2024. This will also involve a public consultation.

The domicile levy will also be reviewed in tandem with the remittance basis of taxation.

Conclusion

Budget 2024 is the second budget in a row firmly focused on putting money back into households to ease increased costs of living, which will be somewhat welcome by individuals today.

However, whether it goes far enough in real terms to address critical issues such as access to the rental and property markets and the prohibitive cost of childcare remains to be seen. Until these challenges are tackled head-on, Ireland will continue to face challenges in retaining and attracting key talent in the marketplace.

Updated personal tax bands and credits

Income tax bands	2023	2024	Change in standard rate band
Single person	€40,000 @ 20% Balance @ 40%	€42,000 @ 20% Balance @ 40%	↑  €2,000
Married or in a civil partnership (one income)	€49,000@ 20% Balance @ 40%	€51,000@ 20% Balance @ 40%	↑  €2,000
Married or in a civil partnership (both with income)	€49,000@ 20% Balance @ 40% (with a max increase of €31,000)	€51,000@ 20% Balance @ 40% (with a max increase of €33,000)	↑  €2,000
Tax credits	2023	2024	Change in tax credit
Single Person	€1,775	€1,875	↑ €100
Married Person or Civil Partner	€3,550	€3,750	↑  €200
Single Person Child Carer Credit	€1,650	€1,750	↑ €100
Home Carer Tax Credit (max)	€1,700	€1,800	↑  €100
Employee PAYE Credit	€1,775	€1,875	↑  €100
Earned Income Tax Credit	€1,775	€1,875	↑  €100
Single Person Rent Tax Credit	€500	€750	↑  €250
Married Person or Civil Partner Rent Credit	€1,000	€1,500	↑  €500
USC rates & thresholds	2023	2024	Change
0.5%	First €12,012	First €12,012	–
2%	Next €10,908	Next €13,748	↑ €2,840
4%	N/A	Next €44,284	New rate
4.5%	Next €47,123	N/A	Rate reduced
8%	Balance	Balance

Contact us

For more on Budget 2024 and what it means for you, reach out to your usual Vialto Partners contact or alternatively:

Keith Connaughton
Partner
keith.connaughton@vialto.com

Ian McCall
Partner
ian.mccall@vialto.com

Aoife Reid
Partner
aoife.reid@vialto.com

Aoife Reilly
Director
aoife.reilly@vialto.com