What Budget 2024 Means for You: A Contractor Breakdown

Today's budget has been characterized as generous, offering something for everyone in the audience. It could be argued that this budget was influenced by upcoming elections, given our surplus of €8 billion, largely attributed to unexpected Corporation tax windfalls. We've allocated €6.5 billion to various initiatives. Among the noteworthy changes, we appreciate the expanded tax brackets, increased tax credits, and the continuation of the 2023 Benefit-in-Kind (BIK) rules, especially for electric vehicles. Additionally, for business owners, we're pleased to see a review of the Entrepreneur Relief scheme and the extension of the retirement relief scheme up to 70 years of age. Below, we've outlined some of the key highlights that will impact you as a contractor or business owner.

PERSONAL TAX

• Personal, PAYE and earned income tax credits will increase by €100 to €1,875.
• The Standard Rate Band has gone up by €2,000, which will now make it €42,000
• The lower 2% rate of Universal Social Charge will go up by €2,840, meaning it will apply on earnings up to €25,760.
• The 4.5% rate of USC is reduced to 4%
• Pay Related Social Insurance (PRSI) contribution rates will increase 0.1% from 1 October next year.
• The home carer and single person child carer tax credit is going up by €100, and the incapacitated child tax credit is increasing by €200.
• The Renters' Credit is to increase from €500 to €750.

BENEFIT IN KIND

• The €10,000 OMV reduction has been held for another year. This will reduce the taxable element of all cars by a gross of €10,000.
• Business owners who have purchased electric cars through their company will be able to continue to avail of the €35,000 threshold. It was planned to taper a decrease of this to €20,000 in 2024. This is good news for electric car owners, as there will be no change in 2024 compared with 2023.

EMPLOYMENT AND BUSINESS SUPPORTS

• Entrepreneur Relief to be reviewed to incentivise Enterprise, this could be good news for business owners.
• Retirement relief to be changed, the 65 age limit will be increased to 70. This means that you can get relief of €750k up to 70.
• R&D Tax credit to be increased from 25% to 30% and doubling of first year payment from €25k to €50k.
• EIIS Scheme. The allowable investment for 4 years has been increased from €250k to €500k.
• Capital gains tax relief for angel investors who invest in innovative start-ups.

VAT

• The existing VAT registration thresholds for businesses will rise from €37,500 for services to €40,000. It will also increase to €80,000 for goods from €75,000

SOCIAL WELFARE

• There will be a rise of €12 in welfare and pension payments from January.
• Double payment for child benefit again this year before Christmas. This is worth an additional €140 per child.
• The Christmas Bonus will be paid to those in receipt of regular Social Protection payments  in early December.
• A once-off double week “Cost of Living Support” payment to all qualifying Social Protection recipients will be paid in January.

EDUCATION

• Families with an income of less than €100,000 will have college fees for undergraduate students halved to €1,500. Other families will see college fees for full-time undergraduate students cut by €1,000.
• Students in the first three years of secondary school are also set to receive free schoolbooks from next September.

HOUSING

• Mortgage Interest Relief - a one-year mortgage interest tax relief for homeowners with an outstanding mortgage balance on their primary dwelling house of between €80,000 and €500,000 will be introduced. The relief will be capped at €1,250 per property.
• The Help To Buy scheme will be extended to end of 2025.
• The Minister has also announced an amendment to allow parents who pay for their student children's rent to claim the renter's credit.

OTHER RELEVANT ITEMS

• Three further energy credits of €150 each, the credits will be applied to household electricity bills over the winter months. They will be provided in three instalments between the end of 2023 and April next year.
• Excise duty on 20 cigarettes will increase by 75c, and the minister has indicated future tax for e-cigarettes in next years budget.
• An introduction of a €1.40 increase in the national minimum wage, bringing it to €12.70 an hour.
• The National Childcare Scheme will see a further 25% reduction in childcare costs.
• Future Ireland fund to be funded by 0.8% of GDP, €4.3billion per annum.
• Child benefit will be extended to those aged 18 years old who are in full-time education.