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Budget 2023

The main aim of Budget 2023 according to the government was to put money back in individuals and businesses pockets to help combat recent cost of living increases.

Here, we take a look at how Budget 2023 affects small businesses and the self-employed:

  • Personal Tax Credit has increased to €1,775.
  • The Employee Tax Credit has increased to €1,775.
  • Earned Income Tax Credit will also increase to €1,775.
  • Single persons standard tax band has increased to €40,000.
  • Married persons standard rate band increases up to €49,000 (with a further increase of up to €31,000).
  • A Temporary Business Energy Support Scheme was announced.
  • Introduction of three €200 Energy Credits for consumers.
  • Employers small gift exemption increasing immediately from €500 to €1,000 – 2 vouchers may be granted by an employer in a year.
  • VAT for hospitality and tourism sector to return to 13.5% on 01 March 2023.
  • Expense allowance for landlords’ pre letting expenses has doubled to €10,000.
  • Introduction of Rent Tax Credit of €500 for tenants.

 

Income Tax Bands

The widening of the income tax bands will take more people out of the higher rate of tax meaning you will now not pay the higher 40% rate of tax until you earn over €40,000. This will have a positive impact on take-home pay from January 2023. The married one income band has increased to €49,000 while the married two income band increases of up to €80,000. The Personal Tax Credit has increased to €1,775. The Employee Tax Credit has increased to €1,775. The Earned Income Tax Credit has increased to €1,775. The Home Carer’s Credit has increased to €1,700.

 

USC

There were some operational tweaks to the Universal Social Charge (USC) as well, designed to benefit lower paid workers. There has been a small update to the 2% rate of Universal Social Charge to take account of the minimum wage increase. The 2% band applies to incomes from €12,012 to €22,920.

 

Temporary Energy Support Scheme for Businesses

The budget announced the setting up of a State Aid Scheme known as the Temporary Business Energy Support Scheme for tax compliant traders, in order to alleviate the burden of increased gas and electricity costs on businesses. Where your average per unit price of energy is more than 50% higher in 2022 (when compared to the corresponding period in 2021), you can register for the scheme on a self-assessment basis. The scheme will cover 40% of the increased bill, subject to a maximum of €10,000 per month. The first payments are expected to be made in November. We will issue more information on this important scheme as soon as we have it.

 

Energy Credit for consumers

The introduction of a direct electricity/energy credit to alleviate the burden of volatile energy prices was announced today. The scheme will grant three €200 credits towards energy bills in December, January & February.

 

VAT for Hospitality Sector

The reduced VAT rate of 9% for businesses in the hospitality industry is to be brought to an end. From 01 March 2023, the VAT rate will be 13.5%. Businesses may need to recode their Point of Sale (EPOS) systems accordingly

 

Rental Property Tenants

Tenants can claim a €500 Rent Tax Credit. If you are renting and want to make sure you avail of this relief make sure you are claiming this credit via Revenue’s website.

 

Landlords

Allowable pre letting expenditure has been doubled from €5,000 to €10,000, if the property has been vacant for a continuous period of 6 months before the date of first letting. The relief will be clawed back if the claimant ceases to let the property as a rented residential property within 4 years of its first letting.

 

Vacant Home Tax

A vacant home tax has been introduced, and the rate applied will be 3 times the Local Property Tax (LPT) for that property. The tax will apply to residential properties which are occupied for less than thirty days in a twelvemonth period.

 

Small Benefit Exemption

There has been an increase to the small benefit exemption cap. Employers can now give €1,000 (up from currently €500) a year tax free to their employees if they so wish. They may give this sum in up to 2 vouchers per annum.

 

State Pension Age

The state pension age will remain at 66.

 

Key Employee Engagement Programme

The government announced some operational changes and the extension of the Key Employee Engagement Programme (KEEP). This scheme was introduced to incentivise and retain key employees. It remains to be seen whether these changes will encourage uptake of the scheme amongst SMEs.

 

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