How Budget 2023 changes affect your business in Ireland

The changes that were announced last September in the Irish budget for 2023 came into effect on January 1. Here we explain how the budget  2023 changes affect you and your business.

The main objective of the budget was to help people steer their way through the increasing costs of living in Ireland.

From a business perspective, all these changes must be considered when calculating employees’ salaries and budgeting for your business for the remainder of 2023.

Business Energy Support Scheme

This temporary scheme is aimed at businesses that are first of all tax compliant, and have experienced some huge increases in their gas and electricity costs. Thankfully, for Irish SMEs, the government is helping here.

Tax-Free Vouchers

The Small Benefit Exemption which allows an employer to provide non-cash (vouchered) payment to employees without payment of taxes has also been increased. More importantly, there is no paperwork involved in the scheme once the vouchers have been purchased and paid for from company funds.

The limit per year has increased from €500 to €1000 and this can be paid as two vouchers over the course of the year per employee.

Personal Income Tax Changes

All of us are affected by personal income tax changes and the government made some significant changes in this area.

• Tax Credits (Personal, Employee and Earned income credit) will increase by €75 each.
• There is an increase of the standard rate income tax band of €3,200 from €36,800 to €40,000.
• There was also an increase in the second USC band from €21,295 to €22,920. This was aimed at helping those on minimum wage.
• Stay-at-home parents will also benefit from an increase of €100 Home Carer tax credit.

The following is an example of how these changes would impact a single individual aged 35 on €50,000 per annum with no dependent children, no pension contributions, and who is a Class A PRSI employee.

 

	2023 €	2022 €
Annual Salary	50,000	50,000
Tax at 20%	8,000	7,360
Tax at 40%	4,000	5,280
Total Tax Liability	12,000	12,640
Personal Tax Credits	-3,550	-3,400
Net Tax Due	8,450	9,240
PRSI	2,000	2,000
Universal Social Charge	1,497	1,537
Total Deductions	11,947	12,777
Annual Disposable Income	38,053	37,223
Monthly Disposable Income	3,171	3,102
Weekly Disposable Income	732	716

 

Total Difference between 2022 and 2023

Annual disposable income	€831
Monthly disposable income	€69
Weekly disposable income	€16

Social welfare changes in Budget 2023

• €600 will be paid over 3 instalments to every household towards the cost of energy rises. The first instalment was paid before Christmas.
• In Budget 2023, social welfare recipients received a double payment in October as well as a Christmas bonus payment in December.
• Low-income households benefited from an additional payment in November of €500.
• Students also gained. There is a €1000 reduction in student fee contribution as well as a once-only double payment of SUSI.
• There will be a €12 increase in weekly payments of social welfare.
• Those on fuel allowances will get a €400 payment
• Working parents will benefit from a 25% reduction in the cost of childcare.
• Primary school children are to get free books.

For all the other budget changes explained in detail click here

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