Business Tax Advice. Corporation Tax. Research & Development (R&D), Capital Gains Tax (CGT)

The Minister for Finance Jack Chambers published his first Budget today  announcing a number of changes to our corporate tax regime.  A raft of tax measures and policies will be introduced to support Irish start-ups, small and medium-sized enterprises (SMEs) and multinational businesses.  Budget 2025 provided for a total budget package of €10.5b  Our focus in this article is purely on Business Taxes under Capital Gains Tax, Corporation Tax, VAT and Employer/Employee Taxes.

SUMMARY OF BUSINESS TAX MEASURES:

1. There will be an increase in the VAT registration thresholds

2. There will be an extension of the temporary 9% VAT rate in relation to supplies of gas and electricity for an additional six months.

3. There will be an increase in the farmer’s flat rate addition from 1^st January 2025.

4. A new 9% VAT rate on heat pumps has been introduced.

5. Employer/Employee Tax Changes – Amendments to Benefit-in-Kind (BIK) on cars

6. Employer/Employee Tax Changes – There will be an increase in the annual employee Small Benefit Exemption from €1,000 to €1,500. A business will also be able to give five non-cash benefits to their employees in a single year.

7. CGT Changes – Amendments to Retirement Relief.

8. CGT Changes – Amendment to Relief for Angel Investors.

9. Corporation Tax Changes

10. Participation Exemption – Exemption for companies in receipt of Foreign Dividends

VALUE ADDED TAX (VAT)

• With effect from 1^st January 2025, the VAT registration thresholds will be increased from €40,000 to €42,500 for services.

• The VAT registration thresholds will be increased from €80,000 to €85,000 for goods with effect from 1^st January 2025.

• The unregistered farmers flat rate scheme will be increased from 4.8% to 5.1%.

• There will be an extension of the reduced 9% VAT rate on electricity and gas up to 30^th April 2025.

• From 1^st January 2025, the 9% VAT rate will also apply to heat pump installations. This will have the effect of reducing the cost of replacing inefficient boilers.

EMPLOYER / EMPLOYEE TAXES

SMALL BENEFIT EXEMPTION

• There will be an increase in the annual limit of the small benefit exemption from €1,000 to €1,500.

• It has also been amended to allow five non-cash benefits, up from two, to be granted by an employer in a single year. The cumulative total of the first five benefits in a calendar year cannot exceed €1,500.

• From 1^st January 2024 an employer is required to return details of all qualifying incentives provided to employees where the small benefit exemption applies.

• This benefit can be given to any employee of the company, including directors and shareholders, providing they are on the payroll.

BENFIT-IN-KIND

• Budget 2025 introduced a BIK exemption for home car chargers provided by employers. It provides for an exemption from Benefit-in-Kind where it is the employer who incurs the cost of providing a facility for electric charging of vehicles at the home of an employee or director.

• The proposed tapering of Benefit-in-Kind Relief for electric vehicles has been deferred. The universal relief of €10,000 which applied to the Original Market Value of a vehicle in Category A – D is being extended to 31^st December 2025.  The amendment to the lower limit of the highest mileage band has also been extended until 31^st December 2025.   Therefore, the highest mileage band is entered into at 48,001km.

CAPITAL GAINS TAX

Retirement Relief

Retirement Relief (CGT) supports the cost effective / tax efficient transfer of businesses and farms from one generation to the next.

Finance Act 2023 introduced a number of amendments to the Retirement Relief regime which included:

1. an increase in the upper age limit from 66 years old to 70 years old.

2. A cap of €10 million of proceeds / market value where the individual disposing of the assets to a child is aged from 55 to 69 years.

3. The current limit of €3million will continue to apply but only from age seventy.

These changes were to come into effect on 1^st January 2025.

Budget 2025 will retain the increased upper age limit. It also introduced a clawback period of twelve years on the Relief.

This means that any tax arising due to the cap of €10 million will be abated provided the assets are retained for twelve years.

In other words, the €10 million cap, due to be introduced on 1^st January 2025, will only apply in circumstances where the child disposes of the assets within twelve years.

Angel Investor Relief

Angel Investor Relief, introduced in Budget 2024, was aimed at encouraging business angel investment in innovative start-ups.

Finance Act 2023 introduced a reduction on this rate for angel investors, bringing it down from 33% to 16% or 18%.

Budget 2025 provides Capital Gains Tax Relief for a third party individual who takes a significant minority shareholding (i.e. between 5% and 49% of the ordinary issued share capital of the company) for a period of at least three years,  in a certified innovative start-up small and medium enterprise (SME) company which is less than seven years old.   The investment by the individual must be in the form of fully paid-up newly issued shares costing at least €20,000 or €10,000 if acquiring between 5% and 49% of the ordinary issued share capital of the company.

Qualifying investors will be able to 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 was previously a lifetime limit of €3 million on gains to which the reduced rate of CGT will apply.  Budget 2025 has increased this limit to lifetime gains of up to €10 million.

 Therefore, the amount on which the reduced CGT rates of 16% or 18% will apply is the lowest of the following:

1. The actual chargeable gain.
2. Twice the amount of the investment.
3. €10 million less the total of all/any other chargeable gains that may qualify under this Relief.

CORPORATION TAX 

The following will be extended for a further two years until 31^st December 2025:

1. Employment Investment Incentive (EII),
2. Start-Up Relief for Entrepreneurs (SURE) and
3. the Start-Up Capital Incentive (SCI)

In addition, the EII limit on the amount that an investor can claim relief on will be doubled i.e. increasing from €500,000 to €1,000,000.

It is proposed to increase the SURE relief available to a maximum of €140,000 per year or a total of €980,000 over seven years.

Research and Development (R&D) Tax Credit

As you’re aware, the existing Research and Development (R&D) Tax Credit provides a 30% tax credit for all qualifying R&D expenditure.

The first year payment threshold will now increase from €50,000 to €75,000.

Companies with claims of between €75,000 and €150,000 will benefit from a €25,000 increase in the first instalment of their claim.

Companies with claims of in excess of €150,000 will continue to receive a first instalment amount based on 50% of the Research & Development Tax Credit claim.

Two new Audio-visual incentives

1. Tax Credit for Unscripted Productions

A new tax credit will be introduced for the unscripted film production sector.

The relief will take the form of a 20% Corporation Tax Credit for certain production expenditure up to a maximum limit of €15 million per project.

The commencement will be subject to State Aid approval from the European Commission.

A cultural test will be introduced.

2. Scéal Uplift

The second incentive is an 8% uplift referred to as the “Scéal Uplift”.

This involves an uplift of 8% to the existing film credit in respect of certain feature film productions.

It will be applied to the existing film credit and will result in a tax credit rate of 40% for projects with a maximum qualifying expenditure of up to €20 million.

This incentive is for small to medium budget productions under the Section 481 film tax credit.

As with the Tax Credit for Unscripted Productions, the Scéal Uplift is subject to State Aid approval.

FOREIGN DIVIDENDS

A new Participation exemption for foreign sourced dividends from subsidiaries in EU/EEA and tax treaty jurisdictions will be introduced with effect from 1st January 2025.  The aim is to simplify existing Double Taxation Relief provisions.

Currently, Ireland operates a worldwide corporate tax regime.  This means that all the profits (both domestic and foreign) earned by an Irish resident company are subject to Irish tax with Relief for any foreign taxes deducted under, a ‘tax and credit’ regime.

Under the new rules, a company will have the option of either (a) claiming the participation exemption or (b) continuing to use existing tax-and-credit relief.

To do this, an election will have to be made in the company’s annual corporation tax return. It will apply to all qualifying dividends in that particular period.

For non-qualifying jurisdictions, the existing method of claiming double taxation relief should continue.

The new participation exemption for foreign source dividends will come into effect from 1^st January 2025.

For full information on Budget 2025, please click https://www.gov.ie/en/publication/e8315-budget-2025/

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Property Taxes Ireland

Understand the Tax measures of Budget 2025 which relate to property transactions, at a glance.

Today, the Minister for Finance and the Minister for Public Expenditure, NDP Delivery and Reform, announced the details of Budget 2025.

As anticipated, Budget 2025 introduced several tax measures in relation to property.

This article will focus on the property related tax measures introduced by Budget 2025, under Income Tax/Personal Tax, Residential Zoned Land Tax (RZLT), Stamp Duty, Vacant Homes Tax (VHT) and Value Added Tax (VAT).

INCOME TAX / PERSONAL TAX

 Rent Tax Credit

• Budget 2025 raised the Rent Tax Credit

• The Rent Tax Credit has been increased to €1,000 for individual renters, or €2,000 per year for jointly assessed married couples/civil partners.

• This applies to the tax years 2024 and 2025.

• Prior to this, the Rent Tax Credit for 2024 was worth €750 for a single individual and €1,500 for a jointly assessed married couple/civil partners.

• As a result of Budget 2025, these new rates have been backdated to cover the 2024 tax year as well as the 2025 year of assessment.

 Mortgage Interest Relief

• Mortgage Interest Relief has been extended.

• There has been no change to the qualifying criteria.

• Homeowners must have an outstanding mortgage balance on their principal private residence of between €80,000 and €500,000 as of 31st December 2022.

• Qualifying homeowners will be eligible for this tax relief in respect of the increased interest paid on their mortgage in 2024 as compared with 2022.

• Tax Relief is at the standard Income Tax rate of 20%.  The Tax Credit is capped at €1,250 per property.

• To claim Mortgage Interest Relief, the taxpayer must file a Tax Return and the taxpayer must be compliant with Local Property Tax (LPT) requirements.

Help to Buy Scheme

• The Help to Buy Scheme has been extended for a further four years at the current rates until the end of 2029.

• The aim of the scheme is to provide certainty for future homebuyers as well as the Irish property market.

• The Help to Buy Scheme is a tax rebate available to first-time buyers to enable them to buy a newly built or self-built house or apartment provided the cost of that purchase is €500,000 or less.

• With the extension of this scheme, first-time buyers of residential property will be able to continue to avail of (i) Income Tax and (ii) Deposit Interest Retention Tax refunds to help them purchase their home.

• The scheme offers a tax refund to first-time buyers, with a maximum value of €30,000 or 10% of the property price, whichever is less.

• The refund will be from the four tax years prior to when the application is made.

• The refund will not include any refunds already claimed.

Pre-Letting Expenses Relief

• Under Pre-Letting Expenses Relief, the current tax relief, capped at €10,000 per premises, for certain pre-letting expenditure will be extended for a further three years to 31^st December 2027.

• Section 97A TCA ‘97, which deals with rental expenses, provides that certain expenses incurred on a vacant residential property before its first letting following a period of non-occupancy are allowable as a deduction against rental income from that specific premises.

• To be allowable, the pre-letting expenses (capped at €10,000 per property) must be incurred on a property that was vacant for a minimum of six months and is then let as a residential property on/before 31^st December 2027.

• These provisions allow for a deduction for certain pre-letting expenses which, otherwise wouldn’t be allowable.

RESIDENTIAL ZONED LAND TAX (RZLT)

• As part of its strategy to meet an increased demand for housing, the Irish Government introduced the Residential Zoned Land Tax (RZLT), which is a new tax on land which is zoned for residential development and which has, in place, all the necessary services to develop housing.

• It was originally introduced in Finance Act 2021 and stated that owners of lands which are zoned under the RZLT were to be taxed at a rate of 3% of the site’s market value from 1^st February each year commencing in 2025.

• Owners whose properties are subject to Local Property Tax and have a garden exceeding one acre will not be obliged to pay Residential Zoned Land Tax. They will, however, be required to complete and file a Tax Return containing details of the property.

• Budget 2025 has provided landowners with an option to re-zone their land, based on the economic activity carried out on their land and to seek changes to the zoning maps in advance of the final maps being published on 31^st January 2025.

• In summary, Budget 2025 has announced a new process available to certain landowners to obtain an exemption from the tax in 2025 where their land should not be subject to the tax.

• Budget 2025 has also introduced a twelve month deferral of the liability between the date planning permission was granted and the commencement date of the development

STAMP DUTY

New 6% Residential Rate

A new 6% rate of Stamp Duty has been introduced on residential properties from 2^nd October 2024.

The stamp duty rates for residential properties will now be as follows:

• 1% on consideration up to and including €1m

• 2% on consideration over €1m and up to and including €1.5m

• 6% on consideration over €1.5m

The existing stamp duty rates will continue to apply to instruments executed before 1^st January 2025 on foot of a binding contract in place before 2^nd October 2024.

10% rate for Bulk Purchases increased to 15%

• Where a person acquires at least ten residential units during any twelve month period, the higher rate of stamp duty is being increased from 10% to 15%, with immediate effect.

• The existing 10% rate will continue to apply to instruments executed before 1^st January 2025 where a binding contract was in place before 2^nd October 2024.

VACANT HOMES TAX (VHT)

• A Vacant Homes Tax (VHT) was introduced by the Irish Government in Finance Act 2022 to encourage an increase in the supply of residential properties available for rent or purchase. As a further incentive, Budget 2025 has increased the rate of the VHT from five to seven times a property’s existing base Local Property Tax (LPT) liability.

• This will take effect from 1st November 2024 i.e. the next chargeable period for Vacant Homes Tax.

• VHT applies to any residential property which is occupied for less than 30 days in a twelve month period between 1st November and 31st October of the following year.

VALUE ADDED TAX (VAT)

VAT Rate on Heat Pumps

• A reduction in the VAT rate for heat pumps to 9% is effective from 1^st January 2025.

• This applies to the supply and installation of heat pumps.

• The heat pumps must meet specific technical standards, as outlined in the EU Directive.

• The aim is to encourage homeowners to install heat pumps to support climate action.

VAT Rate for Gas & Electricity

• The 9% rate of VAT on gas and electricity is to be extended until 30^th April 2025.

• The rate had been due to revert to 13½% on 1^st November 2024.

• The aim of this extension is to reduce the cost of living.

For full information on Budget 2025, please click https://www.gov.ie/en/publication/e8315-budget-2025/

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Personal Tax Advice – Budget Ireland 2025

Understand the Income Tax measures of Budget 2025 at a glance.

Today, the Minister for Finance, Jack Chambers T.D., and the Minister for Public Expenditure, NDP Delivery and Reform, Paschal Donohoe T.D., announced the details Budget 2025.  As anticipated, Budget 2025 introduced several tax measures affecting individuals, families and households.  This article will focus on the tax measure introduced by Budget 2025, specifically under the Income Tax or Personal Tax heading.

Standard rate band increased by €2,000

• The income tax standard rate band has been increased by €2,000 for all earners, resulting in the band for single individuals increasing from €42,000 to €44,000

• The band for Single, Widowed or Surviving civil partners, qualifying for the Single Person Child Carer Credit was raised from €46,000 to €48,000,

• The band for married couples/civil partners with one earner will be increased from €51,000 to €53,000 for the 2025 tax year onwards.

Increase in Tax Credits

• The Personal Tax Credit, Employee Tax Credit and Earned Income Credit will all be increased from €1,875 to €2,000.

• The Home Carer Tax Credit has increased from €1,800 to €1,950.

• The incapacitated child tax credit has been increased by €300 from €3,500 to €3,800.

• The Single Person Child Carer Tax Credit will be increased from €1,750 to €1,900.

• The Blind Tax Credit will be increased from €1,650 to €1,950.

• The Dependant Relative Tax Credit will rise from €245 to €305.

• The Rent Tax Credit has been increased for the tax years 2024 and 2025. It will be €1,000 per year for individuals and €2,000 per annum for a jointly assessed couple (married or civil partners).

• The Sea-going Naval Personnel Tax Credit has been extended for five years to 31^st December 2029.

Other Personal Tax Reliefs

• Mortgage Interest Relief has been extended. There has been no change to the qualifying criteria.  Homeowners must have an outstanding mortgage balance on their principal private residence of between €80,000 and €500,000 as of 31st December 2022. Qualifying homeowners will be eligible for this tax relief in respect of the increased interest paid on their mortgage in 2024 as compared with 2022. Tax Relief is at the standard Income Tax rate of 20%.  The Tax Credit is capped at €1,250 per property.  To claim Mortgage Interest Relief, the taxpayer must file a Tax Return and the taxpayer must be compliant with Local Property Tax (LPT) requirements.

• The Help to Buy Scheme has been extended for a further four years at the current rates until the end of 2029.

• Pre-Letting Expenses Relief. The current tax relief, capped at €10,000 per premises, for certain pre-letting expenditure will be extended for a further three years to 31^st December 2027.  Section 97A TCA ‘97, which deals with rental expenses, provides that certain expenses incurred on a vacant residential property before its first letting following a period of non-occupancy are allowable as a deduction against rental income from that specific premises.

• Various farming related Tax Reliefs have been extended until 31^st December 2027 including (a) Enhanced Stock Relief for Registered Farm Partnerships, (b) Stock Relief for Young Trained Farmers as well as (c) General Stock Relief.

• Budget 2025 introduced a BIK exemption for home car chargers provided by employers. It provides for an exemption from Benefit-in-Kind where it is the employer who incurs the cost of providing a facility for electric charging of vehicles at the home of an employee or director.

• The proposed tapering of Benefit-in-Kind Relief for electric vehicles has been deferred. The universal relief of €10,000 which applied to the Original Market Value of a vehicle in Category A – D is being extended to 31^st December 2025.  The amendment to the lower limit of the highest mileage band has also been extended until 31^st December 2025.   Therefore, the highest mileage band is entered into at 48,001km.

Small benefit exemption

• There will be an increase in the annual limit of the small benefit exemption from €1,000 to €1,500.

• It has also been amended to allow five non-cash benefits, up from two, to be granted by an employer in a single year. The cumulative total of the first five benefits in a calendar year cannot exceed €1,500.

• From 1^st January 2024 an employer is required to return details of all qualifying incentives provided to employees where the small benefit exemption applies.

• This benefit can be given to any employee of the company, including directors and shareholders, providing they are on the payroll.

Universal Social Charge

Various amendments to the USC system were introduced in Budget 2025.

• The 4% rate of USC will be reduced to 3%.

• The 2% USC rate band will increase by €1,622, from €25,760 to €27,382.

From 1^st January 2025, the USC Rates and Bands will be:

• €0 – €12,012 – 0.5%

• €12,013 – €27,382 – 2%

• €27,383 – €70,044 – 3%

• Balance – 8%

Self-employed income over €100,000 will be liable to a 3% surcharge i.e. 11%

PRSI

• All classes of PRSI will increase by 0.1% percentage point from 1^st October 2024.

• From 1^st October 2024 the minimum annual PRSI contribution is €650.

• There will be a further 0.1 percentage point in October 2025. From 1^st October 2025, (i) the employee PRSI rate will increase from 4.1% to 4.2%, (ii) the employer PRSI rate will increase from 11.15% to 11.25% and (iii) the rate will rise from 8.9% to 9% in situations where the weekly income is €496 or less.

• From 1st October 2025, the self employed PRSI rate will increase from 4.1% to 4.2%.

For full information on Budget 2025, please click https://www.gov.ie/en/publication/e8315-budget-2025/

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

UK Taxes. Self assessment Taxes. Personal Taxes. UK Tax Returns

In the United Kingdom, the tax year commences on 6th April and ends on the following 5th April.  HMRC have published a set of criteria which outlines the taxpayer’s requirements in order to accurately and correctly complete a self-assessment tax return.  For further information please click link:  https://www.gov.uk/log-in-file-self-assessment-tax-return

You are required to file a self-assessment form if you are a self-employed individual or if you receive untaxed income, for example, from rental properties.  In other words, the self-assessment system applies to any individual whose income is not automatically taxed at source. To check if you need to file a self-assessment tax return please click: https://www.gov.uk/check-if-you-need-tax-return

For the 2023/24 tax year, taxpayers in receipt of PAYE earnings of up to £150,000 are no longer required to file a self-assessment tax return, provided, of course, that they do not meet any of the other self-assessment criteria outlined by HMRC.

The self-assessment deadline is 31st January 2025 for online submissions, however, if you submitted a paper tax return, the deadline was 31^st October 2024.  Please keep in mind that the tax is still due by 31^st January 2025.

Online Tax Returns must be filed and all outstanding tax paid on or before 31st January following the end of the tax year.

In other words:

1. the online 2023/2024 self-assessment tax return must be submitted on or before 31^st January 2025.

2. The deadline for paying tax due for the 2023/24 tax year is 31^st January 2025 and

3. The first payment on account for the 2024/25 tax year is 31^st January 2025

Failing to file your tax return or pay your taxes by the appropriate date can result in penalties. Missing the 31^st January deadline comes can result in significant penalties even if no tax is owed.  For full details, please click: https://www.gov.uk/self-assessment-tax-returns/penalties

In summary, missing any of the Self-Assessment deadlines can result in penalties and interest. A delay in filing your Tax Return by a single day can result in a £100 fine, even if you don’t actually owe any tax.

You can register for self-assessment through the HMRC website before the deadline of 5^th October.  For further information, please click: https://www.gov.uk/register-for-self-assessment

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Filing Tax Returns. Income Tax. Personal Taxes. Self assessment. Sole Traders. Company Directors

The Income Tax Return filing deadline is 31st October 2024.  That deadline date is extended to 14^th November 2024 provided you file both (a) your Income Tax Return and (b) your Income Tax Balance due for 2023 plus your 2024 Preliminary Tax.

When preparing your 2023 Income Tax Return, here are some Tax Reliefs you may not have considered before:

Childminders Tax Relief Scheme

You could be entitled to the Childminder’s Tax Relief if:

• You mind three or fewer children in your own home at any one time and

• You earn no more than €15,000 per annum.

• You must have informed the HSE that you will be providing such services in your own home.

• You must be registered as self employed and registered under self assessment.

No tax will be payable on the childminding earnings received, provided the amount is not more than €15,000 per annum.

As you cannot deduct any expenses, there is no requirement to maintain and keep detailed accounts.

If another person provides childcare services with you in your home, the €15,000 income limit is divided between you.

Despite the fact that you may have no Income Tax liability, you are obliged to file a Form 11 Tax Return by 31^st October 2024 or 14^th November 2024, whichever is relevant to you.

If, however, the childminding income exceeds the €15,000 annual threshold, the total amount will be taxed as normal under the self-assessment rules.

For further details, please click: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-07/07-01-29.pdf

Irish rent tax credit

The Rent Tax Credit was introduced in Budget 2023 which is available for the tax years 2022 to 2025 inclusive.

In Budget 2024, the Rent Tax Credit was increased by €250.

When completing your 2023 Form 11 Tax Return the rent tax credit is worth a maximum of €500 per year from 2023 for a single individual and €1,000 for a married couple.

The rent tax credit is calculated as 20% of the rent paid in the year and is capped at €500 for a single person or €1,000 for a couple who are jointly assessed to tax.

When calculating your 2024 Preliminary Tax liability, the rent tax credit increases to €750 for a single individual and €1,500 for a married couple.

Please be aware that the claim must relate to rental payments which both (a) fell due and (b) were actually paid during the tax year of assessment.

This tax credit will only be available to taxpayers who are not in receipt of any other housing supports.

For further details, please click: https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/rent-credit/index.aspx

Training Course Fees

Relief is available for fees between €317 and €1,270 paid in respect of Information Technology and Foreign Language courses which are on Revenue’s list of approved Courses.

To check the eligibility of your course, please click the following links:

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/documents/education/s476-approved-languages-2009-10.pdf

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/documents/education/s476-approved-it-courses-2014.pdf

These courses must be at least two years in duration and must not be a postgraduate course. Instead postgraduate courses in foreign languages or information technology may qualify for tuition fees relief.  For further details, please click the following link: https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/education/tuition-fees-paid-for-third-level-education/index.aspx

This relief applies to fees if you are the student or if you have paid fees on behalf of another person.

For complete information, please click: https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/education/foreign-language-and-it-courses/index.aspx

To get your tax return filed before the income tax deadline, please contact us on queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

As you’re aware, the Income Tax / self-assessment Tax Return filing deadline is 31st October 2024.

There is an extension to 14th November 2024 providing you file both (i) your 2023 Income Tax Return and (ii) the Income Tax Balance due for 2023 as well as your 2024 Preliminary Tax payments though ROS.

You should register for Income Tax self-assessment if:

1. You are self-employed.
2. Your only or main source of income is from (a) Rental income, (b) Investment income, (c) Foreign income, (d) Maintenance payments, (e) Fees that are exempt from PAYE or (f) if you have profited from share options or share incentives.

You are obliged register for Income Tax purposes if

• Your taxable non-PAYE income exceeds €5,000 or
• Your gross non-PAYE income exceeds €30,000.

If you do not use ROS to file your Income Tax Return , the tax deadline remains 31^st October 2024.

What’s new in the 2023 Income Tax Return?

NON RESIDENT LANDLORDS

The Non-Resident Landlord Withholding Tax (NLWT) system came into operation on 1^st July 2023.

Collection agents of non-resident landlords may opt to use the NLWT system.

The 2023 Form 11 Income Tax Return contains a new section that should be pre-populated, providing the gross rental income figure and the withholding tax which have been processed through the NLWT.

For further information, please click: https://www.revenue.ie/en/property/rental-income/nlwt/index.aspx

For complete information, please click: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-45/45-01-04.pdf

MORTGAGE INTEREST TAX CREDIT

This credit was introduced for 2023 only.

This tax credit is for taxpayers who have made payments in respect of a qualifying loan for a principal private residence.

A new section has been added to 2023 Form 11 Tax Return for the purposes of claiming of the Mortgage Interest Tax Credit.

The relief is available to homeowners, who as of 31^st December 2022, with an outstanding mortgage balance of between €80,000 and €500,000 and meet the necessary conditions.

For further information, please click: https https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/mortgage/index.aspx

For complete information, please click: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-11B.pdf

What happens if you miss the Tax filing date?

If you fail to meet the October 31^st Income Tax Return deadline, you could be liable to an interest charge for each day you’re late.  Statutory Interest on the overdue tax liability is calculated at 0.0219% per day or part thereof.

This is in addition to a surcharge:

1. If you file your 2023 Form 11 Tax Return after 31st October 2024 but before 31st December 2024 the surcharge will be calculated as the lesser of (a) 5% of the tax due or (b) €12,695.
2. If, however, your 2023 Tax Return is submitted after the 31st December 2024, the surcharge will be (a) the lesser of 10% of the tax liability due or (b) €63,485.

Important Points to keep in mind:

1. Any underpayment of your Income Tax liability will result in interest penalties arising.

2. In order to avoid interest on overdue taxes, you must ensure that your Preliminary Tax is both (a) correct and (b) paid on time. If, for example, you pay a sufficient amount of Preliminary Tax but it’s paid after the tax deadline, then interest may accrue.

3. A late filing surcharge is computed on the full tax liability arising in the year of assessment. It does not take into consideration any advance payments / payments on account.

To get your tax return filed before the income tax deadline, please contact us on queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Changes to Company Size – Micro Company, Small Company, Medium sized Company, Large Companies and Groups

Introduction

Today the Minister for Enterprise, Trade and Employment, Peter Burke TD, signed into law the “European Union (Adjustments of Size Criteria for Certain Companies and Groups) Regulations 2024.”   This resulted in increases in the balance sheet and turnover thresholds for ‘micro’, ‘small’, ‘medium’ and ‘large’ companies in the Companies Act 2014 by circa 25%.  The effect of this change in size is that more companies will move into the micro and small categories and, as a result, benefit through (i) abridged reporting requirements and (ii) the audit exemption.

What’s New?

On 24^th  December 2023, the EU Delegated Directive (2023/2775/EU) came into force. It increased the total balance sheet and turnover thresholds for micro, small, medium and large companies, including groups, as set out in the Companies Act 2014, by approximately 25% to account for inflation.  The measures will apply for financial years beginning on/after 1st January 2024.  This will enable companies to benefit immediately from the adjusted thresholds.  Companies can elect to apply the new thresholds either (i) to financial years beginning on/after 1st January 2024 or (ii) to financial years beginning on/after 1st January 2023.

E.U. member states have until 24^th December 2024 to bring this legislation into effect.

Today, 19th June 2024, Minister for Enterprise, Trade and Employment, Peter Burke, TD signed into law the European Union (Adjustments of Size Criteria for Certain Companies and Groups) Regulations 2024 (S.I. No. 301 of 2024) which comes into operation on 1st July 2024.

These size thresholds are contained in sections 280A to 280I of the Companies Act 2014.

Company size is typically determined by the company meeting two out of the three size criteria. Other relevant factors also apply.

These adjustments will result in more companies being categorised as micro or small which will, as a result, benefit from the abridgement and audit exemption.  These changes are to apply to financial years commencing on or after 1^st January 2024.

What are the increased company size criteria/thresholds?

The increased size criteria/thresholds are as follows:

• Micro Company –a balance sheet total not exceeding €450,000, a net turnover not exceeding €900,000 and no more than 10 average employees.

• Small Company – a balance sheet total not exceeding €7.5 million, a net turnover not exceeding €15 million and no more than 50 average employees.

• Small Group- group balance sheet total not exceeding €7.5 million net (or €9 million gross), group turnover not exceeding €15 million net (or €18 million gross) and no more than 50 average employees.

• Medium Sized Company – a balance sheet total not exceeding €25 million, a net turnover not exceeding €50 million and no more than 250 average employees.

• Medium Group- group balance sheet total not exceeding €25 million net (or €30 million gross), group turnover not exceeding €50 million net (or €60 million gross) and no more than 250 average employees.

• Large Company – a balance sheet total not exceeding €25 million, net turnover not exceeding €50 million and more than 250 average employees.

FINAL POINTS

• The legislation comes into effect from 1st July 2024

• The measures apply for financial years beginning on or after 1^st January 2024.

• Companies may elect to apply the measures on or after 1^st January 2023.

• Large company continues to be one that does not qualify as micro, small or medium in accordance with the above.

• All other qualifying conditions remain the same.

Please click for Regulations: https://www.irishstatutebook.ie/eli/2024/si/301/made/en/pdf

For associated articles, please click:

Annual Return for Companies – Ireland – Accounts Advice Centre

CRO mandatory requirement for company directors to provide PPSNs from 11th June 2023 – Accounts Advice Centre

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Employee (Payroll) versus Self Employed Taxes (Income Tax)

As Accountants, Personal Tax Advisors and Payroll Tax Consultants, the distinction between what constitutes an employee and what are the requirements to be considered a self employed contractor has occupied our minds for many years.  It is often very difficult to determine with complete accuracy whether an individual has been employed under a contract of service or if that same individual could be deemed to be a Sole Trader, providing a contract for services. Over the years a number of tests have been developed to determine the status of the taxpayer.  There has also been considerable case law on this matter.

What’s New?

On 20^th October 2023, the Supreme Court delivered its unanimous decision in The Revenue Commissioners v Karshan (Midlands) Ltd. t/a Domino’s Pizza [2023] IESC 24 (the “Karshan Case.”  It was held that delivery drivers of Domino’s Pizza should be treated as employees and not independent contractors.  Today Revenue published their “Guidelines for Determining Employment Status for Taxation purposes” which outlines a five step decision making framework to determine the employment status of individuals for tax purposes: eBrief No. 140/24

What is Revenue’s view?

According to Revenue:

“Where an individual is engaged under a contract of service, i.e., as an employee taxable under Schedule E, income tax, USC and PRSI should be deducted from his or her employment income through their employer’s payroll system on or before when a payment is made.

Where an individual is engaged under a contract for service, i.e., as a self-employed individual taxable under Schedule D, he or she will generally be obliged to register for self-assessment, to pay preliminary tax and file their own income tax returns using the Revenue Online Service (ROS).”

What does the new Guidance Material say?

The guidance material asks the following questions:

1. Does the contract involve the exchange of a wage or other remuneration for the work carried out?

In other words, there must be an exchange of work for wage/remuneration before a working relationship can be categorised as a “contract for service.”

A contract is considered to be an engagement where there is a payment by the business to the individual regardless of whether or not there is a written contract in place.

2. If so, is the agreement one pursuant to which the worker is agreeing to provide their own services, and not those of a third party, to the employer?

This test distinguishes between a situation where a worker provides services to a business personally versus where it’s possible for that worker to engage others to provide the services on his/her/their behalf.

3. If so, does the employer exercise sufficient control over the putative employee to render the agreement one that is capable of being an employment agreement?

The court judgment placed a strong emphasis on the degree of freedom the individual has to decide how the work is carried out.

It is essential to establish the level of control the business has over the individual worker.  For example, can it decide what the particular duties are, as well as how, when and where the work should be carried out?

Is the worker carrying on the business of the organisation he/she/they work(s) for or is this individual working on their own account?

In other words, to what degree is the worker/individual integrated into the business?

4. If the above three requirements are satisfied, the decision maker must then determine whether the terms of the contract between employer and worker and the related working arrangements are consistent with an employment contract, or with some other form of contract.

Apart from reviewing any written agreement in place, it is vital that the facts of the working arrangement are examined to establish if the individual is working for the business or is providing services on his/her/their own account.

5. Finally, it should be determined whether there is anything in the particular legislative regime under consideration that requires the court to adjust or supplement any of the foregoing.

If the answer to any of the first three questions set out above are “No”, a contract of employment is not deemed to exist and the individual should not be treated as an employee.

If, however, the answer to the first three questions is “Yes”, then questions 4 and 5 of the framework must be considered to determine if a contract of employment exists.

The Guidelines also include nineteen practical examples which demonstrate the application of the five step framework to assist in determining how workers, in a number of different situations, will be taxed.

Conclusion:

• If required by Revenue, taxpayers must be able to demonstrate, using the five step framework, how they determined that a worker should be treated as self-employed rather than as an employee with payroll taxes deducted at source by their employer.

• If a business previously treated a worker as self-employed rather than as an employee, but having reviewed the five-step framework it would appear that this individual is in fact an employee for tax purposes, the business must immediately rectify the situation by operating payroll taxes.

• If the business has incorrectly treated the worker as a self-employed contractor rather than as an employee, the Revenue Commissioners may seek the repayment of uncollected payroll taxes, Employer’s PRSI as well as interest and penalties.

• It is advised that businesses carry out an urgent and comprehensive review of the five step framework to determine employment status of their workers.

Practical Issues

For Tax Advisors and Accountants, the most significant difference is the requirement on an employer to pay employer’s PRSI in respect of payments to employees, currently at the rate of 11.05%  on weekly salaries over €441 or 8.8% if the weekly remuneration is below €441 per week.

Class A is applicable to most private sector employees with payroll taxes deducted at source:

• The Employer Rate is 11.05%
• The Employee rate is 4%
• The 8.8% Employer PRSI applies to class A employees with weekly earnings up to €441. Employees
• Employee PRSI does not apply for employees with weekly earnings of €352 or less.

Class S is applicable to Self-employed individuals:

• A 4% PRSI rate is payable on all income.
• The minimum annual PRSI contribution is €500.
• PRSI is not due and payable if the annual income is less than €5,000.

The tax implications are not the only issues that should be focused upon.  Employee rights must also be considered by Employers.  These include:

1. Minimum wage
2. Unfair dismissals.
3. Equality legislation.
4. Holiday and Sickness payments.
5. Working Hours.
6. Redundancy.
7. Contracts
8. Other Entitlements.

If you require any assistance, please contact us.

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Business Grant Scheme – Commercial Rates for Businesses

As part of Budget 2024, the government signed off on a package of €257 million for the Increased Cost of Business Grant Scheme.  The main aim of this Grant is to support small and medium sized businesses by contributing towards their rising business related costs including energy, labour, rent, etc.  In order to qualify the business must be a commercially trading business which currently operates from a property that is commercially rateable.  If your business does not have rateable premises then you won’t be covered by this scheme.  It is important to keep in mind that this is not a Commercial Rates waiver and businesses should continue to pay their Commercial Rates bill.

To Qualify for the Increased Cost of Business Grant

To qualify for the Increased Cost of Business (ICOB) grant your business must meet the following conditions:

• It must be a commercially trading business, currently operating directly from a property that is commercially rateable.

• It must have been trading on 1st February 2024 and your intention must be to continue trading for at least three months.

• Your commercial rates bill must be equal to or less than €30,000 for 2023.

• You must submit confirmation of your bank details to the relevant Local Authority.

• The business must be considered rates compliant. This includes businesses with phased payment plans in place.

• It must possess a valid Tax Registration Number.

• It must be tax compliant.

The Grant Amount

The Increased Cost of Business (ICOB) grant is a once-off payment based on the value of the 2023 commercial rates bill.

The grant is 50% of the commercial rates bill for eligible businesses with a 2023 bill of less than €10,000.

The grant is €5,000 for eligible businesses with a commercial rates bill of between €10,000 and €30,000.

Businesses, however, with a commercial rates bill over €30,000 are not eligible to receive this ICOB Grant.

Please be aware that Public institutions and financial institutions will not be eligible for the grant, except for Credit Unions and specific post office services.

Vacant properties will also not be eligible for the ICOB Grant.

It is important to keep in mind that this ICOB Grant is not a Commercial Rates waiver. Rateable businesses are still required to pay their commercial rates to their local authority.

Today, the Government issued two important updates concerning the Increase in Grant Scheme (ICOB):

• They specifically targeted businesses in the Retail and Hospitality sectors. Businesses operating within these sectors are now eligible for a second grant payment which is equivalent to the initial ICOB Grant amount.

• The closing date for eligibility confirmation which was 1st May 2024 has now been re- opened from 15^th May to 29^th May 2024.

Local Authorities are expected to begin paying out the ICOB Grant to eligible businesses in the coming weeks.

For further information, please follow the links:

https://www.mycoco.ie/icob

https://www.dlrcoco.ie/sites/default/files/2024-03/ICOB%20User%20Guide.pdf

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

The Chancellor of the Exchequer, Jeremy Hunt delivered his UK Spring Budget 2024 today.

As you are aware, the Furnished Holiday Letting (FHL) regime provides tax relief for property owners letting out furnished properties as short term holiday accommodations.  From 6^th April 2025, however, the Chancellor is removing this tax incentive in an attempt to increase the availability of long term rental properties.

What is a Furnished Holiday Letting (FHL)?

According to HMRC’s guidance material, a furnished holiday let is deemed to be a furnished commercial property which is situated in the United Kingdom.

It must be available to let for a minimum of 210 days in the year.

It must be commercially let as holiday accommodation for a minimum of 105 days in the year.

Guests must not occupy the property for 31 days or more, unless, something unforeseen happens such as the holidaymaker has a fall or accident or the flight is delayed.

Currently, FHLs benefit from the following tax advantages:

• There is a full deduction of interest on borrowings from FHL income.

• Currently, profits from furnished holiday lettings are treated as relevant earnings. Therefore, profits generated from FHLs can be treated as earnings for the purposes of making tax advantaged pension contributions.

• Capital Allowances on items such as furniture, fixtures and equipment can be claimed on your Furnished Holiday Let. You can also claim tax relief on certain refurbishment costs.

• On the disposal of the FHL, Business Asset Disposal Relief (10% CGT rate), Business Asset Rollover Relief and Gift Hold-over Relief may apply.

• Provided there is sufficient business activity to demonstrate a trading activity, FHL properties can qualify for Business Property Relief thereby reducing the value of the business for Inheritance Tax purposes by up to 100%.

So, what happens from 6^th April 2025?

• Mortgage Interest Relief will be given as a 20% tax credit. This will result in a reduction in tax relief from 40% for higher rate taxpayers and 45% for additional rate taxpayers.

• The normal residential property CGT tax rate of 24% will apply.

• Relief may be available for the replacement of domestic items in line with the regulations for long term lets.

• FHL profits will no longer be treated as relevant earnings for the purposes of making pension contributions.

• Properties will no longer qualify for Business Property Relief, thereby increasing Inheritance Tax liabilities.

What actions can you take?

You may wish to consider your options before the rules are abolished in April 2025.

Options include:

• Continue renting your property as before but without the current tax advantages.

• Sell the property with the aim of benefitting from the 10% CGT rate.

• Gift the property with the aim of benefitting from Business Asset Disposal Relief and Gift Hold-over Relief.

• Change your rental strategy by renting your property on a long term basis.

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.