BUDGET 2023

Today the Minister for Finance, Pascal Donoghue and Minister for Public Expenditure & Reform Michael McGrath have announced Budget 2023.

Todays Budget, has been built against the background of Inflation and Cost of living supports

Taxation receipts for the year to date have been strong, and we are currently running a surplus of €1 billlion in 2022 and  €6.2 billlion next year. It was widely anticipated that this was a buget with large spending and it didnt dissappoint with an extra spend of €11 billlion.

We have highlighted below the most common changes that will be relevant to our clients. 

Employment and Business supports

A new temporary Busisness Energy support scheme has been put in place to allow businesses to claim up to €10,000 per month in support. Details will emerge on how this is adminstered

The small benefit exemption scheme has been increased to €1,000 per year, this can be made up of 2 vouchers. DIrectors and employees may avail of this.

Personal Tax

The retention of existing income tax rates (of 20% and 40%), however the Minister has indicated that a third rate of tax may be introduced in 2024. This could be a 30% rate

Tax bands have increased by €3,200 to €40,000 for individuals, this is worth  €680 annually to higher rate tax payers

An increase in the earned income, Employee and Personal credit by from €1,650 to €1,725. This is worth an extra €150 per annum for most taxpayers

An increase in the home carer tax credit from €1,600 to €1,700.

USC rates remain the same, though the bands have changed slightly to allow for the increase in the Minimum wage to €11.30. The 2nd band will move to €22.920

Rental Tax Credit of €500 to be introduced

Corporation Tax

As a country we are over-reliant on Corporation tax receipts, over 8 billion in Corporation tax could be “vulnerable to a shock”. No changes have been flagged to Corporation tax, and as usual it will be kicked down the road in order to maintain our 12.5%

VAT

The main change to VAT is that the temporary reduced rate for hospitality will increase from 9% to 13.5% from end of February

Vat on newspapers and defibribillators have been reduced to 0%

Social Welfare

All Social welfare payments to increase by €12 per week

Once off double payment for Social welfare before end of year along with Christmas double payment.

Double payment for Children's allowance in November

Fuel allowance eligibility has been extended out

Other Relevant items

Bad news for the smoker as cigarettes will rise by 50 cents per pack. An everage pack no costs €15.50 (unless bringing home from your holiday)

No increased duties on petrol or diesel as previous excise reductions to remain in place

No change to the price of a pint, and there is a reduction on cider by 50 cents.

Free school books for Primary school children

Once off reduction of €1,000 in Third level education fees, there will also be a permanent reduction to €2,500 for students whose parents earn less than 100k per annum

The help to buy scheme has been extended to 2024

Conclusion

Budget 2023 has been put in place to put more money in our pocket to deal with inflation. For the average Professional contractor it is worth 830 in tax savings, (more if married on single income, with children). if you avail of the increased Small benefit exemption it could be a tax saving of another 250, and for renters 500 in extra credits.