Budget 2024 - Tax Insight for your Business

Budget 2024 was announced today with some important tax measures for Irish businesses. Michael McGrath said of the budget that it was "framed against a backdrop of global uncertainty – both economic and geopolitical".

The old reliables appear again with incremental increases in the tax bands and credits, an increase in minimum wage and further taxes levied on tobacco, petrol and diesel. Further measures widely flagged in advance of the budget were announced including mortgage interest relief and a cost-of-living package. There was a modest increase in the VAT registration thresholds, whilst two new funds are also being introduced, The “Future Ireland Fund” aimed at protecting living standards and public services, and the “Infrastructure, Climate and Nature Fund”, to protect investment in infrastructure in the event of economic downturns and to support climate and nature related projects. Education and climate measures featured strongly in the Minister’s speech as well as the focus on Irish businesses. Included in the measure were changes to three key existing incentives and the introduction of a fourth that could have a big impact for Irish business owners, investors and SMES alike:

Changes to Existing Reliefs:

R&D tax credit has increased from 25% to 30%

Ireland has long been a destination of choice for companies engaged in R&D activity. Among the many benefits for companies with R&D activity is the generous R&D tax credit. Today’s budget announced an increase in the refundable tax credit from 25% to 30%. With the corporation tax rate for some MNEs increasing from 12.5% to 15%, the R&D tax credit increase will keep pace with the additional tax cost. For companies still at the 12.5% corporation tax rate, the 30% increase should result in additional benefits.

Retirement relief age limits have gone from 66 to 70.
Retirement relief has been a staple of the Irish tax system for decades and is essential in allowing family businesses pass to the next generation. The relief is more generous for individuals under 66 than those over 66, with the intention to encourage the early transfer of businesses. However, the government have recognised that people are working longer as the population ages and have increased the benefit before 66 to those aged 70 with effect from January 2025. However, all the changes are not to be welcomed in that also from 1 January 2025, there will be a new limit of €10 million on the relief available for disposals to a child up until the age of 70. Currently for those under 66 there is no limit. If there are any business owners between 55 – 66 with a family business they intend to transfer valued in excess of €10m, then it may be necessary to look at this in 2024 if a CGT liability is to be avoided.

A New Incentive for Investors

Angel Investor CGT relief

Tax reliefs that reward investors for taking risks and supporting indigenous SMEs are to be applauded. The existing relief for entrepreneurs has proved very popular and the government have considered how to expand the attractiveness of supporting start-ups. The existing relief applies to individuals working in the business, but doesn’t attract outside investment. To that end a new “Angel Investor” relief is being introduced. Qualifying investors can benefit from a reduced (16% / 18%) CGT rate on gains arising from the disposal of a qualifying investments. Initially the gains that can qualify for the relief will be capped at a maximum of twice the initial investment, with a lifetime limit of €3m.

Commentary provided by Bruce Stanley, Tax Partner at HLB Ireland

For a full summary of provisions outlined in the Government's 2024 Budget, please download our report by clicking the button below.