Irish Tax Experts based in Dublin

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.

WHAT IS IT?

The Local Property Tax or LPT is a self assessed tax payable by an individual on the market value of his/her “residential property or properties” located in Ireland.

WHAT DOES THAT MEAN?

It means the LPT is a self assessed tax.  You are responsible for valuing your own property, filing your tax return and making the relevant payment.

WHAT’S MEANT BY “Residential Property?”

A “residential property” is any building (or part of a building) which is used or is suitable for use as a residence.  It includes the driveway, yard, garden, garages, sheds and any other land associated with the property up to one acre in area.

HOW IS THE PROPERTY VALUED?

Because the LPT is a self assessed tax the property owner must decide on the market value of the property.  Once the market valuation has been made it will hold for LPT purposes until the end of 2016 regardless of any improvements or renovations to the property or indeed any changes to the property market.

Revenue will not be valuing individual properties.  Instead they will provide guidance to assist the property owners in valuing their own property.  The LPT information guide uses the following resources as suggestions on how to honestly value your property:

• Property Websites including www.daft.ie, www.myhome.ie, etc.
• Local Estate Agents
• The Property Services Regulatory Authority’s Property Price Register
• www.revenue.ie for a guide on average values for a range of different property types  based on a number of factors including age of property, average price of type of property for each electoral district in Ireland.  There is also a Valuation Technical Paper available on this website to assist you accurately value your property regardless of where you live in Ireland.

If in doubt, it is advisable to get a valuation from an independent Auctioneer, Valuer or Estate Agent.

CAN THE VALUATION BE CHALLENGED?

There is a presumption of honesty with this new tax.  An exact valuation will not be required unless the property is valued at €1 million or more.  However, Revenue will challenge cases where it is obvious that an undervaluation has occurred in which case they can raise an assessment on the undervaluation.

If such a situation arises, the tax payer can appeal the assessment to the Appeal Commissioners.

HOW IS LPT CALCULATED?

The amount of LPT depends on the property value.

Property values are organised into bands.  The first band is for property values between €0 and €100,000.  After that all values are in €50,000 bands.  Where the property has a value of in excess of €1m an exact valuation is required.

Once the property owner has identified the band in which his/her property falls into, the LPT will be calculated automatically when filing on line via ROS (Revenue on line System).

It is not necessary to ask your Accountant / Tax Adviser to calculate this tax as there is a ready-reckoner provided to assist those completing their Returns.

But just in case you want to know how to calculate the tax liability, it’s computed as follows:

• Apply 018% to the mid point of the relevant band.
• If your property is valued at €1m or over then the first €1m will be assessed at 0.18% with the remainder at 0.25%

Again, please make sure you have an exact valuation if your property is worth €1m or over.

WHO HAS TO PAY THE LPT?

The simple answer is the owner of the property on the date the LPT falls due.

The filing date for 2013 is 1^st May 2013.  For 2014 onwards it will be 1^st November.

If you are in the process of selling your property but still haven’t sold it by 1^st May 2013 then you will be considered the “liable person” for 2013 even if the property is sold before the end of the year.

The following individuals are liable to pay the LPT:

• Any one who owns property situated in Ireland regardless of whether he/she lives in Ireland or not.
• The landlord in situations where the property is rented under leases of less than twenty years.
• Trustees in circumstances where the property is held in a trust.
• Local authorities or organisations that provide social housing.
• Any one who holds a “life interest” in a residential property.
• An individual who legally occupies a property on a “rent free” basis.
• Lease holders whose leases are more than twenty years.
• The personal representative of a deceased owner including executors and administrators of the deceased’s estate.

If two or more people own a residential property they are both liable for the LPT.  It is essential that they agree who should file the return and pay the relevant tax.  If neither owner pays the LPT then Revenue can collect the tax from either party.

ARE THERE ANY EXEMPTIONS?

There are a number of exemptions including:

• New and unused properties which have been purchased from a builder or developer between 1^st January 2013 and 31^st October 2016.  They will be exempt until 31^st December 2016.
• Residential Properties purchased by a first time buyer between 1^st January 2013 and 31^st December 2013.  These properties are exempt until the end of 2016 providing they are used as the individual’s principal private resident (sole or main residence).
• Properties that are unsold and are not used as a residential property.  These properties must be constructed and owned by a builder / developer.
• Registered Nursing Homes.
• Diplomatic properties including embassies.
• Mobile homes, vehicles or vessels.
• Properties used by charitable bodies.  They must provide residential accommodation in connection with the recreational activities for which they were set up.
• Residential properties owned by a charity or public body to provide accommodation to people with a particular need.  For example, sheltered housing for elderly or disabled individuals.
• Properties which are certified as having significant pyritic damage in line with Government regulations.
• Properties purchased or adapted for the use of a severely incapacitated individual who has received an award from P.I.A.B. (Personal Injuries Assessment Board) or from a trust established.  The property must be the individual’s main or sole residence.
• Properties in unfinished housing estates (“Ghost Estates).
• A property owned by an individual which has been vacated due to long term mental or physical infirmity.

HOW DO WE PAY THE LPT?

The liable person must complete the tax return and select the preferred payment option.

If you prefer submitting a paper return the due date for both filing and paying is 7^th May 2013.  In other words you must enclose a cheque, bank draft or postal order with the completed form.

If you wish to submit a return on line there is an extended filing date to 28^th May 2013 with the following options:

• You can pay by single debit authority.  The payment deadline date in this instance is 21^st July 2013.
• If you wish to pay on a phased basis, the commencement date is 1^st July 2013.

WHAT IS MEANT BY A “PHASED BASIS”?

A phased basis means:

• A deduction from salaries, wages or occupational pensions.
• A deduction from certain payments from the Department of Social Protection.
• A deduction from certain payments made by the Department of Agriculture, Food and the Marine.
• Direct Debits
• Cash payments including debit and credit card payments which are made in equal instalments through an approved payment provider.

HOW WILL AN EMPLOYER KNOW TO DEDUCT LPT?

Revenue will advise the employer of the amount to be deducted.

If a payment is deducted from the individual’s salary at source it is not subject to charges or interest.

WHAT HAPPENS IF THE LPT RETURN IS NOT SUBMITTED?

Revenue will pursue the amount by raising a “Notice of Estimate” using a wide range of collection options including:

• Mandatory deductions of the required amount from salaries, wages, pensions, Government payments.
• Notices of Attachments on bank accounts.
• Handing the debt to the Sheriff.
• Referring the debt to the Revenue Solicitor.
• Withholding refunds of other taxes due until the LPT is paid in full.

WILL INTEREST AND PENALTIES APPLY?

Interest and penalties on late payments will apply.

Not submitting an LPT Return could result in a penalty of the amount of the LPT that would have been payable on a correctly completed return up to a maximum of €3,000.00.  This penalty could arise even if the individual has actually paid the LPT.

A Tax Clearance Certificate will not be issued to the individual.

If you are obliged to file Income Tax, Corporation Tax or Capital Gains Tax Returns, you will incur a 10% surcharge at the relevant filing dates,  if you have not filed your LPT Return and paid the corresponding liability or entered into a payment agreement.  The surcharge will be capped at the amount of the LPT liability only in situations where the LPT position is subsequently brought up to date.

WHAT HAPPENS IF I OWN MORE THAN ONE PROPERTY?

Taxpayers who own more than one property are obliged to pay and file on line.  They do not have the option of submitting a paper return and accompanying cheque, draft or postal order.

WHAT IF I CAN’T PAY THE LPT?

In certain circumstances an individual can opt to defer the payment of taxes if certain conditions are met.

It is important to remember that a deferral is not an exemption.

The deferred tax will remain as a charge on the property until the property is sold or transferred to another person.

There are four categories of deferral of the LPT:

1. Hardship Grounds
2. Personal Insolvency
3. Personal representative of a deceased person.
4. Income Threshold

Revenue will review applications in respect of the first three categories and following its review will grant or deny the deferral application.  These deferrals are not restricted to owner occupiers.  They can apply to personal representatives of deceased liable persons, individuals who have entered into insolvency agreements under the 2012 Personal Insolvency Act as well as those who have suffered unavoidable and unexpected significant financial loss and cannot pay the LPT without excessive hardship.

The fourth category dealing with the Income Threshold does not involve an approval process.  The thresholds are based on gross income providing certain conditions are met.  The standard income threshold can be increased if the claimant pays mortgage interest and this category of individuals must be owner occupier i.e. it does not apply to owners of multiple properties.

I STILL HAVE QUESTIONS

If you still have questions, please contact us on 01-  872 8561 or visit the revenue site http://www.revenue.ie