The Irish government announced the budget for 2023 on the 27th September 2022.

The budget outlines all of the governments’ spending and revenues including all government departments, agencies, non-commercial state bodies, and the local government sector.

One of the main focuses of the 2023 budget is to help individuals and businesses navigate the increasing cost of living in Ireland.

This blog will guide you through the main points of Budget 2023 that will affect business owners and individuals in Ireland.

If you have any questions about these changes, please talk to a trusted advisor or contact your accountant. We’re here to help.

Personal Income Tax changes

  • The ceiling of the second USC rate band will increase from €21,295 to €22,920. This benefits individuals who earn minimum wage.

  • The standard rate band for income tax will increase by €3,200, from €36,800 to €40,000

  • The main tax credits (Personal, Employee and Earned Income Credit) will be increased by €75

  • The Home Carer Tax Credit will increase by €100 to support stay-at-home parents

Measures to support Irish enterprise/SMEs

Temporary Business Energy Support Scheme

This scheme is set to benefit businesses that are tax compliant and have experienced a significant increase in their natural gas and electricity costs. Businesses that see an increase of 50% or more in their energy prices from 2021 will be eligible for support under the scheme. Once eligibility criteria are met, the support will be calculated on the basis of 40% of the amount of the increase in the bill amount, with a monthly cap of €10,000 per trade and an overall cap on the total amount.

Small Benefit Exemption – tax-free voucher for employees

The Small Benefit Exemption is a scheme that allows an employer to provide limited non-cash, tax-free benefits to their workers without the payment of income tax, PRSI and USC.
The annual limit for this benefit has increased from €500 to €1000 and businesses are also permitted to purchase a two vouchers per employee per year.

Additional tax measures

  • A new rent tax credit of €500 per year for taxpayers who are paying rent on their principal private residence

  • Enhanced pre-letting expenses regime for landlords, increasing the amount that may be claimed per premises to €10,000

  • Reduction in the period for which premises must be vacant from twelve to six months

  • Vacant Homes Tax will be charged at a rate equal to three times the property’s existing basic Local Property Tax rate

  • A new 10% levy on concrete blocks, pouring concrete and certain other concrete products

Changes to VAT

  • The hospitality VAT rate will revert back to 13.5% in February 2023

  • 0% VAT rate on newspapers from 1 January 2023

  • 0% VAT rate on hormone replacement and nicotine replacement therapies

  • 0% VAT rate on certain menstrual products

Changes to allowances - social welfare measures

- €600 payment to all households, paid in three instalments of €200 for energy with the first to be paid before Christmas 2022
- Double payment for social welfare recipients in October and the Christmas bonus payment in December
- Low-income households will benefit from an additional €500 in November
- Reduction in student contribution of €1,000 and a once-off double SUSI monthly payment
- Increase of €12 on weekly social welfare payments
-€400 payment for those on fuel allowance
- 25% reduction in the cost of childcare
- Free books for primary school children

A note from CEO of Accountant Online, Larissa Feeney

I was pleased with the Budget announcements today. There was a good balance between relief for individuals and for businesses on the rising cost of living. It was good to see the minister acknowledge the temporary nature of some of our corporation tax receipts and make some provisions for this going forward.
I also welcome the commitment to extend KEEP until the end of 2025 and there appears to be a recognition of the need to make some changes to this which is badly needed for our small business clients to attract and retain talent in the current environment, I look forward to seeing this develop through 2023. I note the provision to amend the payment element of the R&D tax credit – but I would like to see it made accessible to businesses – it is very difficult for small businesses to understand and access in its current format.