Budget 2023 great for many

but sustainable long term?

New budget includes vast short term and long term measures with a total expenditure of €11 billion.

If you would like to check a summary of the main changes to other parts of the Budget 2023 such as cost of living supports, supports for energy costs, social welfare, health, housing, education, employment and other areas please go to https://www.citizensinformation.ie/en/money_and_tax/budgets/budget_2023.html

From the tax prospective the main changes that will positively impact tax payers are:

INCOME TAX

Income tax rates will stay the same (at 20% and 40%).

• An increase of €3,200 in the income tax standard rate cut-off point for all earners, from €36,800 to €40,000 for single individuals and from €45,800 to €49,000 for married couples / civil partners with one earner. This is as follows (source: Revenue.ie):

• An increase of €75 in the Personal Tax Credit from €1,700 to €1,775

• An increase of €75 in the Employee Tax Credit from €1,700 to €1,775

• An increase of €75 in the Earned Income Credit from €1,700 to €1,775

• An increase of €100 in the Home Carer Tax Credit from €1,600 to €1,700

USC

• An increase of €1,625 to the 2% rate band ceiling from €21,295 to €22,920 The reduced rate of USC concession for medical card holders is being extended for a further year.

Small Benefit Exemption:

It is proposed to increase the limit of the “Small Benefit Exemption” to €1,000 and an increase in the number of benefits in a year that an employer can give from one to two per year (to a maximum annual total of €1,000).

HOUSING

Rent Tax Credit:

A new tax credit of €500 per annum for renters in the private rented sector is being introduced for those who are not in receipt of any other State housing support. Only one credit may be claimed per person per year, however it is proposed that the value of the credit will be doubled in the case of married couples and civil partners. It is proposed that the credit may be claimed “in year” in the years 2023 to 2025 and that, in addition, it may be claimed for 2022 from early in 2023.

Help to Buy:

Extension of Help to Buy (HTB) to 31 December 2024

Living City Initiative:

Extension of the Living City Initiative (LCI) to 31 December 2027, acceleration of relief for owner-occupiers so that it can be claimed as a deduction from total income of 15% of the total eligible expenditure in each of the first six years and 10% for the seventh year and carry forward of relief for owner-occupiers.

Pre-letting Expenses:

Increase eligible expenditure limit for pre-letting expenses for landlords to €10,000 and halve the vacancy period to six months.

Vacant Homes Tax (VHT):

A new Vacant Homes Tax (VHT) will be introduced in 2023. The VHT will be self-assessed and administered by the Revenue Commissioners. The measure aims to increase the supply of homes for rent or purchase to meet demand, rather than raise revenue. The tax will apply to residential properties which are unoccupied for twelve months or more. A property will be considered vacant for the purposes of the tax if it is occupied for less than 30 days in a 12-month period.

CLIMATE AND ENVIRONMENTAL MEASURES

Carbon Tax:

The Carbon Tax rate will increase from the current rate of €41 to €48.50 per tonne of CO2. This will apply to auto fuels with effect from 12 October 2022 and all other fuels from 1 May 2023.

VAT AND EXCISE MEASURES

Application of a zero VAT rate for:

• newspapers and news periodicals, including digital editions The VAT rate on newspapers and news periodicals will be reduced to zero from 9%. This measure will apply to digital editions of these publications

• Automatic External Defibrillators and period products

• all non-oral Hormone Replacement Therapy

• all non-oral Nicotine Replacement Therapy.

Tobacco Products:

Tax Increase in 50c on pack of 20 cigarettes with pro-rata increase on other tobacco products.

Bank Levy Extended to the end of 2023.

TEMPORARY MEASURES:

Mineral Oil Tax Excise Reduction Extension:

Excise rate reductions in the order of 5, 16 and 21 cents per litre VAT inclusive currently apply to MGO, diesel and petrol respectively. This measure provides for their extension until 28 February 2023.

Extension of 9% VAT rate for gas and electricity: The 9% VAT rate was previously introduced for gas and electricity on 1 May 2022 and is due to expire on 31 October 2022. This rate has now been extended to 28 February 2023 which will provide for a lower VAT rate from November to February.

There are other benefits introduced by the Government Departments including the Department of Social Protection budget allocation which is €23.4 billion in 2023 which are significant and can be found on https://www.gov.ie/en/publication/27341-budget-2023/