Contextual Setting of Budget 2024
Budget 2024 is set against the backdrop of three matters that needed careful consideration from the Government, namely signs of falling corporate tax receipts, an inflationary environment that is still affecting cost of living and a continuing housing crisis.
Economic Overview and Fiscal Targets
That said the country is at full employment with a record 2.6 million people at work and the exchequer is still forecasting to return a Budget surplus of €10 billion in 2023 and €12.5 billion in 2024.
Budget Objectives and Vision
Last year Minister Donohoe, as Minister for Finance, described Budget 2023 as a "Cost of Living" Budget. This year, as Minister for Public Expenditure, NDP Delivery and Reform, the Minister noted that "this is a Budget for building a better future for this country".
Introduction of National Funds
With this forward thinking in mind, the Minister for Finance, Minister McGrath, announced the introduction of two National Funds:
These funds will be funded by windfall corporation tax receipts.
The Minister was clear that the Future Ireland Fund was not a rainy day fund but rather a fund established to help meet future costs we know are coming in the years ahead.
The Infrastructure, Climate and Nature Fund will be designed to be counter cyclical and will provide support in times of fiscal and economic difficulties.
These are both welcome and represents long-term strategic thinking that politicians are often accused of not enacting in the interesting of short-term goals that may resonant more with the electorate.
Addressing Cost of Living and Housing Measures
As is expected there are a number of measures in the Budget aimed at the cost of living issue facing society.
In addition to increases in the Standard Rate Cut Off point and tax credits, there are increases in child care support and the child allowance, and the introduction of a limited form of mortgage interest relief.
Further energy cost measure are included to counteract the increased cost of energy and the rent credit is also seeing an increase.
In an effort to reduce the exodus of small scale landlords from the rental market, anticipated measures have been introduced in the form of a tax credit against rental income.
Other housing related measure include the extension of the Help to Buy scheme and an increase in the rate of Vacant Homes Tax.
Business-Friendly Measures
A number of business-friendly measures were also announced in Budget 2024.
The introduction of a new targeted capital gains tax relief for Angel Investor in innovative start-up SMEs is to be welcomed. The R&D Tax credit is being increased from 25% to 30%. For large multinationals that are facing the new 15% rate of tax from next year, the increase will offset what would have been lost by this new rate of corporation tax.
However, for companies who are still subject to the 12.5% rate of corporation this will represent a welcomed increase relief. VAT registration thresholds are being increased for the first time in quite a few years.
Overall Budget Package
Overall Budget 2024 represent a package of measures that come to €14 billion.
In many ways it could be said that Budget 2024 has tried to keep the ship steady in terms of the measures while trying to give something to as many people as possible. A lot of extensions to existing schemes have been announced without the introduction of any radical new reliefs.
How does this impact you?
Our experts prepared a commentary video offering you in-depth analysis and insights into the measures presented in Budget 2024 by the Irish Government. The BDO panel brings a wealth of knowledge and experience to unravel the intricacies of this fiscal roadmap and explain the real impact these measures bring. In this insightful discussion, we will delve into the policy nuances, economic implications, and potential societal impacts of the budgetary decisions, aiming to provide a comprehensive understanding of the roadmap shaping Ireland's economic trajectory in the year ahead.
We hope you find our commentary on Budget 2024 insightful and informative. You can watch it here, or listen to the podcast on-the-go.
If you have any questions on what the measures mean for you or your business, please contact a member of the BDO Tax Team.
Following the publication of The Finance Bill (No.2) 2023, you can find our experts' detailed insights here:
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