Budget 2024

Pension changes

There were no changes in relation to private pensions in Budget 2024, although we expect some small pension changes to be included in the Finance Bill 2023 which is due to be published later this month. These changes are likely to involve a further implementation of more of the recommendations detailed in the report produced by the Inter-Departmental Pensions Reform & Taxation Group (IDPRTG), such as the removal of the upper age of 75 on PRSA’s (thereby creating a whole of life PRSA) and a relaxation of the transferability options relating to Retirement Annuity Contracts / Personal Pensions.

Social Welfare Pensions

Budget 2024 confirmed that the State Pension (Contributory) Personal Rate will increase by €12 per week from €265.30 per week to €277.30 per week from January 2024.

Cost of Living ‘one off’ support payments

This year the Cost of Living Support payments will be as follows:

• Energy credit of €450 across three instalments of €150 between the end of this year and next April.
• Double child benefit.
• Christmas bonus of social welfare payments.
• Once-off double payment of all social welfare payments in January.
• €400 lump sum to recipients of the working family payment.
• Those on the Living Alone Allowance will receive an extra €200 payment.
• Once-off payment of €400 to be made before Christmas to recipients of Carer's Support Grant, Disability Allowance, Blind Pension, Invalidity Pension and Domiciliary Care Allowance.

Pensions – no changes

In summary, there were no changes in Budget 2024 to the following:

Employer Pension Contributions: Corporation Tax relief will continue to be available on Employer Pension Contributions paid to an approved Occupational Pension Scheme subject to the overall maximum pension funding and benefit limits.

Employer Contributions to a PRSA: Last year the Finance Act 2022 removed the Benefit-in-Kind Charge on an Employer Contribution to a PRSA and there were no further changes in Budget 2024. There is currently no limit on employer contributions to an employee’s PRSA (however, the overall standard fund threshold for an individual of €2m still applies).

Tax Relief - Employee Pension Contributions: This relief will continue at the marginal rate of income tax but subject to the Age-Related Contribution Limits and Earnings Cap (and overall Revenue Maximum Approvable Benefit limits).

Employer Corporation Tax: The Corporation Tax rate remains at 12.5% for the vast majority of businesses trading in Ireland (with a minimum effective tax rate of 15% applicable from 1 January 2024 to large firms with group turnover of €750 million or more). 

Retirement Lump Sum: Up to €200,000 remains tax-free and amounts from €200,000 to €500,000 will be taxed at 20%. 

Standard Fund Threshold: The Taxes Consolidation Act (Chapter 2C of Part 30) imposes a limit or ceiling on the total capital value of pension benefits that an individual can draw in their lifetime from tax-relieved pension products, where those benefits come into payment for the first time on or after 7 December 2005. This is called the Standard Fund Threshold (SFT) and is currently €2 million. There are significant additional tax liabilities where the limit is exceeded.

We will need to wait until December 2023 to see whether Minister for Finance agrees to amend or increase the SFT from 2024 due to the cost of living crisis in line with an earnings adjustment factor (as provided for in the definition of “standard fund threshold” in section 787O of the Taxes Consolidation Act, 1997).

Life and taxation

In Budget 2024 Minister McGrath said he is currently undertaking a "review of the funds sector".

He said the review will report to him next summer and will examine a "Life Assurance Exit Tax". Mr McGrath added once the review is completed, he will then consider any changes to the taxation framework. 

Until the review is finalised the DIRT tax remains at 33%, the 1% Insurance Levy also remains in place and the rate of Exit Tax on Life Assurance Policies and Investment Funds remains at 41% for individuals.

Income Tax

There was an increase of €2,000 in the income tax standard rate band for all earners, from €40,000 to €42,000 for single individuals and from €49,000 to €51,000 for married couples/civil partners with one earner and increase up to €33,000 (from €31,000) for two earners.

There was also an increase each of the Personal Tax Credit, Employee PAYE Tax Credit and Earned Income Credit by €100, from €1,775 to €1,875 and an increase of €100 in the Home Carer Tax Credit from €1,700 to €1,800 and an increase of €200 in the Incapacitated Child Tax Credit (from €3,300 to €3,500).

Universal Social Charge (USC)

The USC Rates & Bands from 1 January 2024 will be:

Incomes of up to €13,000 are exempt. Otherwise:

• €0 – €12,012 @ 0.5%
• €12,013 – €25,760 @ 2% (there was an increase of €2,840 to the ceiling for the 2% rate band)
• €25,761 – €70,044 @ 4.0% (the rate is to reduce from 4.5% to 4%)
• €70,045+ @ 8%
• Self-employed income over €100,000 = 3% surcharge

The USC concession for medical card holders is being extended for a further two years to 31 December 2025. Reduced rates of USC apply to individuals who have a full medical card and whose income is €60,000 or less per annum. The reduced rates of USC are 0.5% on the first €12,012 and 2% on the balance.

PRSI

Pay Related Social Insurance (PRSI) contribution rates will increase 0.1% from 1 October 2024.

Savings: Corporate Deposits

The current corporate exit tax rate remains at 25%, in line with corporation tax for non-trading income.

Capital Acquisition Tax (CAT)

There was no increase in any of the CAT Thresholds and these remain as follows:

• The Group A Threshold (gifts or inheritance from parent) remains unchanged at €335,000.
• The Group B Threshold (gifts or inheritance from. brother/sister/aunt/uncle/grandparent/foster child) remains unchanged at €32,500.
• The Group C Threshold (relationship other than A or B) remains unchanged at €16,250.
• The rate of Capital Acquisition Tax remains at 33%.

Capital Gains Tax (CGT)

Capital Gains Tax rate remains at 33%.