Budget 2024 – Expert Analysis
Minister Michael McGrath announced his first budget as Minister for Finance yesterday Tuesday 10th October with Pascal Donohoe making the step over to Public Expenditure on this occasion. It was a budget speech full of references to “cost of living”, “planning for the future” and the “housing crisis”. A total budget package of €14bn was announced but the immediate question arising from the speech was have the measures gone far enough to meet those areas of concern with the rising cost of living for individuals and the rising cost of running a business for business owners? We will look at the highlights from those key areas of reference below. Cost of living €12bn has been provided to deal with the cost of living measures. Some of the key areas of tax saving for individuals to increase their take-home pay include:
- Raising the standard rate of income tax threshold by €2,000 to €42,000. This will save earners on €42,000 or more €400 per year in income tax.
- Increasing most tax credits by €100 which in a lot of cases will see earners benefit by €200 per year.
- Increasing rent tax credit to €750 from €500.
- Amendments to the USC which will see the 4.5% rate reducing to 4% and increasing the 2% rate band by €2,840. This could save a person earning €70k per annum €406.
- The 9% VAT rate on gas and electricity to be extended by 12 months to end of October 2024.
- €450 of energy bill credits to be provided over 3 instalments between end of 2023 and April 2024.
- A €300 lump sum payment for fuel allowance recipients and a €200 lump sum for Living Alone Allowance recipients in November.
- A Christmas bonus paid in early December and a cost of living double week in January will be paid to social welcome recipients.
- A €12 weekly increase in social welfare payments.
- The work on a participation exemption for foreign dividends will be examined and will not be introduced until next year's finance bill.
- A review of interest deductibility was a welcome announcement but we would hope this will be acted on in future for an area that has many complexities for corporates and advisors.
- A TALC subgroup will be formed to review business supports with the view to simplifying.
- A public consultation on VAT modernisation will take place.
- A public consultation will be launched in relation to share-based remuneration.
- A promise from the Minister to review Entrepreneur Relief to improve the incentive for founders.
- Confirmation that amendments would be made to the Employment Investment Incentive Scheme to increase the limits an investor can invest to €500,000 for a 4-year holding. It was noted that the EIIS would be reviewed going forward to simplify what is a very onerous piece of legislation at present.
- The prior amendments to the Key Employee Engagement Programme which sees it extended to end of 2025, doubling the limit of shares within the KEEP scheme to €6m and allowing CGT treatment on buy back of shares from an employee have now received EU State aid approval and can be implemented.
- A new capital gains tax relief for angel investors in innovative start-ups. Investment must be for 3 years and at least €10,000 for 5%-49% share in the entity by acquiring newly issued shares. The relief will allow a CGT rate of 16% (18% if through a partnership) on gains up to twice the value of the initial investment with a lifetime limit on qualifying gains of €3m.
- From 1 January 2025 the age category for retirement relief of 55-65 will be extended to 55-70. Therefore, a tax free consideration of €750k will be available until 70 and reducing to €500k after 70. For a transfer to a child there was previously no limit to 65 and a €3m limit after 65 but now there is a €10m limit introduced until 70 and the €3m applies after that.
- Extension of accelerated capital allowances for energy efficient equipment to 31 December 2025.
- The tapering of the tax-free element for BIK purposes on electric cars was postponed with the €35,000 threshold remaining until the end of 2025 and the €10,000 additional deduction has been extended by one year to the end of 2024. This is a welcome move to encourage the use of electric vehicles as company cars with the first €45,000 being disregarded from the OMV for BIK purposes for 2024.
- Consanguinity relief was extended a further 5 years to 31 December 2028 which allows a 1% stamp duty rate to apply to transfers within a family.
- Accelerated capital allowances for farm safety equipment extended by 3 years to 31 December 2026.
- Lifetime relief limits from stock relief, stamp duty relief and succession farm partnerships to €100,000 from €70,000.
- Stock relief increased from €15,000 to €20,000.
October 11, 2023
Budget 2024 – What to Expect
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.
October 9, 2023
New Partner joins Roberts Nathan
(l-r) Partners: Peter Roberts, Vivian Nathan, Gerard Hughes, Brendan Kean We are pleased to announce the appointment of Gerard Hughes as a new partner in our Insolvency & Advisory Services. Gerard Hughes brings a wealth of experience and expertise, enhancing the firm's capabilities in providing comprehensive solutions to businesses facing financial challenges. "We are delighted to welcome Gerard Hughes to our Insolvency & Advisory Services team," said Vivian Nathan, Managing Partner, Roberts Nathan. "Gerard's deep understanding of the insolvency landscape and his commitment to delivering exceptional results align perfectly with our firm's values and client-centric approach. His expertise will further strengthen our ability to support businesses in navigating financial complexities and charting a path towards sustainable growth." With over 15 years of experience in the field of insolvency and restructuring, Gerard Hughes has established himself as a trusted advisor in helping businesses navigate complex financial situations. Gerard will work closely with clients to provide tailored solutions in insolvency, restructuring, and financial advisory services. His addition to the team reinforces Roberts Nathan's commitment to delivering comprehensive and reliable business advice to clients, enabling them to make informed decisions during challenging times.
May 30, 2023
Congratulations to Leann Landers..
Congratulations to Leann Landers for being nominated for the "Apprentice of the Year award" with The Generation Apprenticeship Apprentice of the Year programme. All of us in Roberts Nathan are so proud of you! A fantastic event, MC'd by Dermot Bannon, was held last night at The Mansion House, Dublin for the awards ceremony. Leann and her manager, Susan Lennon, were delighted to attend. It was great to see Simon Harris, who launched the programme along with the National Apprenticeship Office, in attendance and he delivered an excellent speech to the 187 nominees who were present last night with their friends and families. [video width="1280" height="720" mp4="https://www.robertsnathan.com/wp-content/uploads/2022/12/RN_-_Leanne.mp4" autoplay="true"][/video]
October 26, 2022
Congratulations to Aidan Scollard…
Congratulations to Aidan Scollard on his recent award with BITA, "Irish Business Leadership Award 2022". Aidan works extensively with growth-focused Irish and UK business owners to maximise cross-borders structures, supports and trade. Pictured below are Aidan Scollard, Diane Birch, Executive Director, and Paul Whitnell, President BITA.
October 6, 2022
Budget 2023 – What does it mean for your Business?
Paschal Donohoe and Michael McGrath have delivered Budget 2023 which the Minister for Finance specifically referred to as a “cost of living” Budget. The Minister referred to the difficult balancing act faced by the Government to help ease the burden of the rising costs of living on the public while also not driving up inflation which is currently at 8.5%. In this regard, the measures introduced were weighted strongly towards individuals’ financial position rather than towards businesses and corporates. Some of the main changes introduced to help for individuals include:
- Each PAYE worker/sole trader in the higher tax band will see tax savings in 2023 of over €800 over the course of the year with the following measures:
- increase of the standard rate band to €40,000,
- increase of personal, employee and earned income tax credits by €75 each, and
- increase in the 2% USC rate threshold by €1,625.
- A tax credit for those who are renting of €500 per annum including for the year 2022.
- Electricity credits of €600 of which €200 will be paid in December 2022 with the remainder early in the new year.
- There were a number of increases for social welfare recipients including:
- Social welfare payments to be increased by €12 per week;
- One off double week payment to social welfare recipients in October in addition to the Christmas bonus in December;
- One off payment of €200 for those in receipt of the Living Alone Allowance;
- One off payment of €500 to those on Disabililty Allowance, Invalidity Pension and Blind Pension;
- One off payment of €500 to those on Carer’s Support Grant.
- Parents will benefit greatly in this budget with the following items being introduced
- A 25% weekly reduction for those availing of the National Childcare Scheme
- A once off double payment of child benefit to all qualifying households
- Free school books to be provided for primary school children.
September 27, 2022
2022 is a special year for Roberts Nathan….
2022 is a special year for us all in Roberts Nathan as it marks our 25-year anniversary since the firm was formed. It was great to get a few days away with the Roberts Nathan team to celebrate. It's been a wonderful journey so far now with 55 on the team in Dublin and Cork and growing. Thanks to Colm O'Regan, Willie Hyland and Midland Escape and The Heritage Hotel who helped make the event a great success. [video width="1280" height="720" mp4="https://www.robertsnathan.com/wp-content/uploads/2022/12/Roberts_Nathan_Staff_Event_Sept_2022-2-1.mp4" autoplay="true"][/video]
September 22, 2022
Share Option Schemes
31 March is an important deadline for companies who have provided share option schemes to their employees. A Form RSS1 is required to be completed and filed with Revenue where share options are either granted, exercised or sold. The Form RSS1 must be sent to Revenue on or before 31 March in the following year of assessment i.e., for 2021 this would be due on the 31st of March 2022. This form is required to be returned to Revenue electronically by using their online system. Where the share option scheme is operated under the Key Employee Engagement Programme (“KEEP”) a KEEP 1 return is also required to be filed by the employer by 31 March for any KEEP options granted, exercised, assigned or released. As companies begin to see the light at the end of the Covid-19 tunnel we have seen an increased interest in looking at rewarding key management with an interest in the company. We have outlined below the reporting requirements for employees who obtain unapproved share options. As you will note, unapproved share options can often lead to a significant income tax bill for the employee and if not exercised at a point of sale can have cash flow implications. Two common alternatives to unapproved share options which can have a more positive tax impact are both the KEEP mentioned above and growth shares which are popular to incentivise key staff to grow the business. We will look at the advantages of these share award options in our next article. In the meantime, below are the key considerations for employees obtaining unapproved share options from their employer.
Grant of Share Option SchemeThe granting of share options would not be subject to tax in Ireland provided the share option is not capable of being exercised more than seven years after the date on which it is granted. If it is capable of being exercised more than seven years after the date of it being granted, you will only pay tax if the option price is less than the market value of the shares at the grant date. The tax is due on the difference between the:
- market value of the shares on the grant date
- amount you pay when you exercise the option.
Exercise of Share Option SchemeOnce share options are exercised, an individual will be subject to Income Tax, USC and PRSI at a rate of 52% on the gain arising on the exercise of the shares. The gain arising on the shares will be calculated as the difference between: (a) the market value of the shares at the date of exercise; and (b) the amount you paid for the shares at the time of exercise. Once a share option scheme is exercised, an individual is required to file an RTSO1 and remit the tax to Revenue within 30 days of exercising. You will also be required to register for income tax and a Form 11 will be required to be filed. If you exercise shares in 2021, you will be required to file a Form 11 by 31 October 2022.
Sale of SharesIf you exercise your share options and then subsequently dispose of the share you acquired you may be liable to Capital Gains Tax (CGT). You must report this disposal to Revenue, even if no tax is due. The CGT would be calculated as the difference between the sales proceeds and the base cost of the shares. The base cost would compromise the cost paid for the share options (if any), the price paid for the shares on the exercise of the share options and the gain arising on the exercise of the share option. The gain arising would then be subject to CGT at a rate of 33%. If the shares are disposed of between 1st of January and 30th of November, the CGT would be due on the 15th of December. If the shares are disposed of between 1st of December and 31st of December, the CGT would be due on the 31st of January. The disposal will be required to be reported in your income tax return for the year the shares were disposed. We have set out above a high-level overview of the compliance obligations for employers and employees on unapproved share schemes. As discussed, we will look in our next article at the benefits or alternative share option scheme such as KEEP and growth shares. If you are offering a share option scheme to your employees or have a share award you wish to exercise or sell you should talk to our tax team at Roberts Nathan.
March 3, 2022
Revenue Update – Debt warehousing and Covid-19 supports
Last week Revenue began to write to taxpayers who are availing of debt warehousing and other Covid-19 supports. In relation to debt warehousing, Revenue are reiterating the need for all returns to be filed on time, even where warehousing is being availed of on payment. Any taxpayer availing of debt warehousing but does not have all tax filings up to date will be reminded to do so immediately or lose their entitlement to avail of the Debt Warehousing Scheme. Any returns outstanding will be brought to the taxpayers attention in the Revenue latest correspondence. For taxpayers availing of both Debt Warehousing and either the Employment Wage Subsidy Scheme or the Covid-19 Restrictions Support Scheme, they will be advised to bring any outstanding returns up to date within 21 days or their tax clearance will be rescinded and they will no longer be eligible for any of the support schemes. Revenue have also began a second stage of TWSS reconciliation, seeing employers who have availed of the scheme receiving a detailed reconciliation through ROS. Employers have until the end of June 2021 to review the information contained in the reconciliation by Revenue and accept, appeal or make any required adjustments to their claim by this date. It is also worth noting for taxpayers who are not availing of debt warehousing but do have tax liabilities outstanding that Revenue will seek to enforce debt collection of outstanding liabilities over the coming weeks as highlighted in a press release earlier this month. Finally, late filing surcharges for corporation tax returns had been suspended from March 2020, however Revenue have now confirmed that for corporation tax returns due between 23 March 2020 and 23 June 2021 (i.e. accounting periods ended between 30 June 2019 and 30 September 2020), will need to be filed by 30 June 2021. Corporation tax returns (including iXBRL financial statements if required) will be required to be filed on time from this period on to avoid late surcharges. If you would like to explore further options around your business, please contact Brendan Murphy who would be very pleased to assist you. Brendan Murphy: firstname.lastname@example.org
March 30, 2021
On Wednesday Rishi Sunak announced the UK budget and Irish interest was immediately drawn to the confirmation that the Corporation Tax rate would increase from 19% to 25% from April 2023 for companies with profits of at least £250k. This can only be seen as a positive for Ireland where our continued commitment to the 12.5% Corporation Tax rate would make it an ideal location from UK businesses looking to relocate operations to the EU. Ireland’s Corporation Tax code is built on transparency and substance and we have advised many businesses on the requirements to establishing in Ireland from a direct tax, indirect tax and commercial perspective.
March 5, 2021