Budget 2024 will be announced on Tuesday 10th October 2023.
Over the next three years, the Government is going to have a projected cumulative budget surplus of €65 billion – mainly due to corporation tax receipts. This is the biggest budget surplus in our history. The general public is probably expecting to see some big spending in budget 2024, however, the Irish Fiscal Advisory Council (IFAC) has warned not to spend too much.
The Government has set aside a €6.4bn spending package for Budget 2024 – however, that could rise to around €11.4bn if once-off measures like energy rebates and financial support for businesses are taken into account.
The government could include lots of one-off measures, such as more electricity credits, temporary reductions in college fees and double social welfare payments. The Irish Fiscal Advisory Council would be happy enough with this use of the corporation tax windfall because it does not permanently increase government spending.
Budget 2023 was the largest Social Welfare package in over a decade, with the measures introduced costing over €785 million in a full year.
Income Tax Cuts in Budget 2024
In Budget 2024 we expect to see increases in income tax credits and also the income level at which people enter the higher tax rate.
Back in April 2023 , April – Taoiseach Leo Varadkar told a private Fine Gael meeting that middle-income families will be prioritised in Budget 2024 along with workers who pay too much tax
In early June, the Fine Gael leader once again said that Budget 2024 would lift the point at which people pay the higher rate of tax and that there will be a “substantial welfare and pensions package”, although he indicated it would not be precisely similar to last year’s mix of €12 weekly payments and once-off lump sums.
On June 21st – The Central Bank of Ireland warned the Government that big tax cuts in the budget or spending increases above the 5 per cent spending rule are likely to “add significantly” to inflation and run the risk of overheating the economy.
The ESRI also warned in June that tax cuts would not be a good idea – however on June 29th the Minister for Finance Michael McGrath said that on the subject of tax cuts ” We have a Programme for Government commitment to index-link credits and bands and the Programme for Government will be honoured,”
USC rates could also be cut .
Reports in mid-September suggested that the 4,5% Universal Social Charge (USC) rate may be cut from 4.5% to 4% in Budget 2024.
Reduced Childcare Costs
On June 20th Taoiseach Leo Varadkar said “There will be a further reduction in the cost of childcare for families next year, you can be sure of that,”
Varadkar said “Minister O’Gorman has set the target of reducing childcare costs by 50 per cent. We kind of did half of that in the last budget. I am not sure we can go as far as 25 per cent in the next one but it certainly is our intention to bring about a further meaningful reduction in the cost of childcare for families.”
Increases to Welfare and Pensions
We expect there will be increases to all welfare benefits and the state pension in Budget 2024.
In early June , the Fine Gael leader said that Budget 2024 will provide a “substantial welfare and pensions package”, although he indicated it would not be exactly similar to last year’s mix of €12 weekly payments and once-off lump sums.
A number of groups , including Age Action, the National Women’s Council and Siptu , are calling on the Government to increase the State pension by more than €50 per week in the 2024 budget so it meets the 34 per cent of average earnings threshold.
We also expect the annual Christmas Bonus for long-term welfare recipients and pensions to be paid at 100% again this year.
Child Benefit Bonus Double Month
There is a possibility of another double month of child benefit sometime in 2024. This would mean an extra €140 per child.
There is also a possibility that the regular monthly child benefit payment could be increased .
Mortgage Interest Relief
Increased mortgage rates have resurrected the possibility of bringing back tax relief on mortgage interest. But it is looking unlikely that it will be reintroduced for everyone.
Mortgage interest relief was stopped on any mortgages taken out on or after 1 January 2013 .In 2017 the relief was stopped for everyone.
In August 2023 – Leo Varadkar said that a targeted form of mortgage relief was under consideration, although no decisions had been made.
Housing
The Help to Buy scheme, often blamed by opposition politicians for increasing house prices, is set to be extended again in Budget 2024
The First Home Scheme, a shared-equity scheme in which first-time buyers of new homes get up to 30pc of the cost of the property from the State, may be extended to second-hand homes and self builds.
The current rent tax credit of €500 a year may be doubled to €1000.
There have also been suggestions that the Rent a Room relief, which allows income of up to €14,000 tax free, may be increased.
VAT
In 2022 ,Gross VAT Receipts were € 26.7 billion, a 24% increase from 2021 and 23% of the total gross tax receipts.
Increased VAT rates on Gas and Electricity
Since May 2022 , there has been a temporary reduction of VAT on electricity and gas . The VAT rate was reduced from 13.5 per cent to 9 per cent. The end date for this reduced VAT is currently 31st October 2023. The end of the VAT reduction might be confirmed in Budget 2024 as energy prices have started to fall .
VAT on New Homes.
KPMG Ireland has called for a reduced rate of VAT on new homes and home improvements. It could be reduced from 13.5% to 9%.
We will keep this page updated with any further news about what to expect in Budget 2024