Below are the main tax measures of interest other than the usual adjustments to bands and credits:
New Capital Gains Tax relief for Angel investment in innovative start-ups
A new capital gains tax relief for angel investment in innovative start-ups is being introduced. Qualifying investors can benefit from a reduced rate of capital gains tax for gains arising from the disposal of a qualifying investment in a qualifying company, up to a maximum gain of twice their initial investment. This new relief is being introduced to encourage angel investment innovative start-ups, in line with the recommendation from the Commission on Taxation and Welfare. The relief will be available to an individual who invests in an innovative start-up small and medium enterprise (SME) for a period of at least 3 years. The investment by the individual must be in the form of fully paid-up newly issued shares costing at least €10,000 and constituting between 5% and 49% of the ordinary issued share capital of the company. The scheme will include a certification process, which will be carried out by Enterprise Ireland, to ensure the relief is targeted at innovative SMEs that can demonstrate financial viability and compliance with the requirements of the EU General Block Exemption Regulation. Qualifying investors may avail of an effective reduced rate of CGT of 16%, or 18% if through a partnership, on a gain up to twice the value of their initial investment. There is a lifetime limit of €3 million on gains to which the reduced rate of CGT will apply.
From 1 January 2025, the higher level of relief, which applies on disposals to children and to others, will be available for disposals occurring from the age of 55 until the age of 70. Also from 1 January 2025, there will be a new limit of €10 million on the relief available for disposals to a child up until the age of 70.
Employment Investment Incentive (EII)
The EII provides income tax relief for risk capital investments in qualifying small and medium enterprises. From 1 January 2024, the minimum holding period required to obtain relief is being standardised to four years for all investments, and the limit on the amount that an investor can claim relief on for such investments is being increased to €500,000. Further changes will be made to the scheme to reflect amendments to the EU General Block Exemption Regulation and details will be set out in the Finance Bill.
Research and Development Tax Credit
The Research and Development (R&D) tax credit provides a 25% tax credit for qualifying R&D expenditure. The rate is being increased from 25% to 30% in respect of 2024 expenditure, for which claims will be filed in 2025. The first year payment threshold allows for a claim up to the threshold amount to be paid in full in year 1, rather than over three years. The current threshold of €25,000 is being increased to €50,000.
Accelerated Capital Allowances
Energy Efficient Equipment The Accelerated Capital Allowances (ACA) scheme for Energy Efficient Equipment (EEE) provides a tax incentive for companies and unincorporated businesses who invest in highly-EEE. The scheme is being extended for a further two years to 31 December 2025.
Increase in VAT Registration Thresholds
From 1 January 2024, the existing VAT registration thresholds are being increased from €37,500 for services and €75,000 for goods to €40,000 for services and €80,000 for goods.
Consanguinity (Stamp Duty) Relief
This stamp duty relief is being extended to 31 December 2028. It reduces the rate of stamp duty applicable to intra-familial transfers of farmland from 7.5% to 1%.
Accelerated Capital Allowances – Farm Safety Equipment
This scheme, which allows for accelerated capital allowances of 50% per annum for eligible equipment, is being extended to 31 December 2026.
Young Trained Farmers and Succession Farm Partnerships
Stock relief for young trained farmers, relief for succession farm partnerships and young trained farmers stamp duty relief are being amended to increase the aggregate lifetime amount of relief available to a person under these reliefs from €70,000 to €100,000 from 1 January 2024.
Stock Relief (Registered Farm Partnerships) Stock relief for registered farm partnerships is being amended to increase the threshold from €15,000 to €20,000 in the case of qualifying periods commencing on or after 1 January 2024.
Rented Residential Relief
A new tax relief for landlords is being introduced. It will provide a relief, at the standard rate, of residential rental income. The relief will be as follows: €3,000 in the tax year 2024; €4,000 in 2025, €5,000 in 2026 and €5,000 in 2027. A full claw-back of the benefit of the relief applies in the event the landlord removes from the rental market, within 4 years, any of the rental properties held in year 1 when the benefit is claimed. There is no clawback after the expiry of the 4-year period. The relief relates only to tenancies registered with the Residential Tenancies Board, or where a landlord lets a residential property to a public authority (including a Local Authority). In the case of joint ownership of a property, the relief will be divided in proportion to the percentage of the rental income to which each owner is entitled.
Mortgage Interest Tax Relief
A temporary one-year mortgage interest tax relief scheme is being introduced for homeowners with an outstanding mortgage balance on their principal private residence of between €80,000 and €500,000 on 31 December 2022. Qualifying homeowners will be eligible for mortgage interest tax relief in respect of the increased interest paid on that loan between the calendar year 2022 compared to the calendar year 2023 at the standard rate of income tax (20%), capped at €1,250 per property. Further information is contained in Chapter 4.
BIK Measure: Original Market Value Deduction for Certain Categories of Vehicles
The temporary universal relief of €10,000 applied to the Original Market Value of a vehicle (including vans) for vehicles in Category A-D and the amendment to the lower limit of the highest mileage band is being extended to 31 December 2024.
BIK Measure: Relief for Battery Electric Vehicles
The tapering mechanism applied to benefit in kind relief for electric vehicles is being enhanced by extending the current Original Market Value deduction of €35,000 until end 2025, followed by a reduction to €20,000 in 2026 and €10,000 in 2027.
Farmer’s Flat Rate compensation
The flat-rate scheme compensates unregistered farmers on an overall basis for VAT incurred on their farming inputs. Based on macro-economic data received from the CSO and the Revenue Commissioners for the period 2021-2023, this rate will decrease from the current 5.0% to 4.8% from 1 January 2024.
Come talk to us if you wish to discuss it in more detail with our tax team.