Tomorrow, Tuesday 10th October, the Minister for Finance and the Minister for Public Expenditure will announce Budget 2024. With local Council and European elections next summer and a general election most likely during 2025, it is likely the Budget will follow recent trends of aiming to please a large percentage of the electorate while perhaps not doing a significant amount for any one particular area. There is expected to be a big focus on the cost of living crisis while also being cautious of an over-dependence on corporation tax receipts which may be volatile in the future. In this regard and from information coming from government comments it seems that the following will be likely part of the announcement:
- A small increase in the standard rate band by €1,000 – €1,500.
- A small change in USC perhaps by 0.5% or increasing the threshold at which low-income earners enter the USC scale.
- An increase in social welfare payments and double payments on Christmas week.
- Another energy credit regime similar to 2023 which could see two or three credits of c.€100 provided against energy bills.
- For young families there will be assistance through cuts to childcare costs and free schoolbooks for secondary school children.
- For renters it is likely the rent credit will be increased from €500.
As practitioners dealing with clients on a daily basis in relation to their tax affairs, there are certain changes we would really welcome in the Budget. We have set some areas we feel would be beneficial to the overall economy and address the concerns of clients we talk to.
There has been some talk of a benefit being provided to landlords who enter into a long-term lease with a tenant. This would be very welcome and could have a real positive impact on the rental market. We continuously have enquiries from property owners in relation to their tax position if renting a premises. Unfortunately, for those with a salary/income from another source, it often means their tax bands and credits are already being used and the rental profit suffers income tax at 52%. It is not encouraging for landlords to enter long-term leases with tenants when they are only netting less than half of the rental profit.
As mentioned above, there has been mention of another energy credit being announced in this year’s Budget which would see household owners obtaining perhaps a couple of €100 or €150 credits against their energy bills. It is important to note that the reduced VAT rate of 9% which applies to gas and electricity is due to expire at the end of October 2023. An extension of this VAT rate could be another good way to help domestic and commercial energy costs and would certainly be encouraged. We would hope to hear the Minister provide for such an extension tomorrow.
It has been an area of focus recently by Revenue to carry out compliance reviews of employees who received share awards/share options. This has led to many employees who may never have filed income tax returns realising their compliance requirements on share awards/options. This can be a complicated and confusing area for employees and although the KEEP scheme sought to provide a beneficial share scheme from a tax perspective it appears to have failed in practice due to the onerous nature of the rules. It would be sensible to look at perhaps a complete overhaul of the KEEP scheme or introduce a user-friendly share award/option programme for employers to reward and encourage key staff members.
An area of concern for clients considering succession planning or entrepreneurs trying to drive a business to succeed is often potential changes in capital taxes. A commitment to ensuring the main capital tax reliefs of entrepreneur relief to encourage entrepreneurs; business asset relief to ensure safe succession of a business within the family and retirement relief would be useful to avoid worry of such reliefs being potentially taken away at short notice in future. We would also suggest a reduction of CGT and CAT from 33% could be encouraging to see properties, businesses and other assets changing hands.
We await tomorrow’s announcement with interest and we would be delighted to see a real focus on looking after our domestic SMEs and our entrepreneurs to encourage them to keep employment at such a record high. We feel the above suggestions would be good ways to reflect this.