Let’s look at budget 2025 and 10 takeaways from that. It’s not a blog divided into two with the first part looking at the budget. The second part reviews 10 takeaways like Indian, chippers, and Chinese! I know I know you are all budgeted to death at this stage. Me too. But while we all know a bit about the upcoming changes it is useful to know how things impact you. Plus, when do the new rules come into play? A neighbour stopped me on Tuesday night.
“Hey, you’re the tax guy, so you’ll know this. I got an inheritance from my aunt but didn’t pay the tax yet. Will the new changes mean I pay less tax”?
Answer – No.
Reply “Feck you, you’re no use to me then”
The 10 takeaways from Budget 2025 that we’ll look at are
- Tax Rates and Tax Bands
- Tax Credits
- Universal Social Charge
- Rent Tax Credit
- Mortgage Interest Relief
- Small Benefit Exemption
- Gifts and inheritances
- Property
- VAT Registration Thresholds
- BIK Company Cars
Tax Rates and Tax Bands
| Personal Circumstances | 2025 € | 2024 € |
| Single or widowed or surviving civil partner without a qualifying child | 44,000 @ 20%
Balance @ 40% |
42,000 @ 20%
Balance @ 40% |
| Single or widowed or surviving civil partner, qualifying for single-person child carer credit | 48,000 @ 20%
Balance @ 40% |
46,000 @ 20%
Balance @ 40% |
| Married or in a civil partnership, one spouse or civil partner with income | 53,000 @ 20%
Balance @ 40% |
51,000 @ 20%
Balance @ 40% |
| Married or in a civil partnership, both spouses or civil partners with income | 53,000 @ 20% with an increase of 35,000 max
Balance @ 40% |
51,000 @ 20% with an increase of 33,000 max
Balance @ 40% |
So, a single person or single parent getting the single person child carer credit gets an extra €2000 at the lower 20% rate. That’s a tax saving of €400. A married couple, where both have income can get up to an extra €4,000 at the lower rate. A saving of €800.
Tax Credits
| Tax Credits | 2025 € | 2024 € |
| Single Person | 2,000 | 1,875 |
| Married or civil partnership | 4,000 | 3,750 |
| Employee Tax Credit | 2,000 | 1,875 |
| Earned Income Tax Credit | 2,000 | 1,875 |
| Widowed person or surviving civil partner (without a qualifying child) | 2,540 | 2,415 |
| Single Person Child Carer Tax Credit | 1,900 | 1,750 |
| Incapacitated Child Tax Credit | 3,800 | 3,500 |
| Dependent Relative | 305 | 245 |
| Home Carer Tax Credit | 1,950 | 1,800 |
A single self-employed or employee will get an extra €250. That’s €125 for the single person credit and €125 employee tax credit or €125 earned income credit for the self-employed. Whereas a married couple who are both working or both self-employed will get double of €500. That’s €250 from the married tax credit and €125 for each spouse for the employee or earned income credits.
Between the rate bands and credits, there are accumulated tax savings of €650 for a single person and €1,300 for a married couple where both are working.
Universal Social Charge [USC]
| 2025 € | Rate | 2024 € | Rate |
| Income up to 12,012 | 0.5% | Income up to 12,012 | 0.5% |
| Income from 12,012 to 27,382 | 2% | Income from 12,012 to 25,760 | 2% |
| Income from 27,382 to 70,044 | 3% | Income from 25,760 to 70,044 | 4% |
| Income above 70,044 | 8% | Income above 70,044 | 8% |
There’s no USC charge if your income is €13,000 or less and certain incomes are not liable to USC. These include state pensions and deposit interest.
It’s disappointing that there’s no change to the top rate of 8% and very disappointing for the self-employed who have profits greater than €100,000. The extra 3% surcharge on those profits keeps their tax rate at 55% on those profits.
A person earning €70,000 will pay USC of €1,646 in 2025. That compares to USC of €2,105 on the same earnings in 2024. A saving of €459.
Rent Tax Credit
The rent tax credit increases by €250 to €1,000 for a single person and €2,000 for a jointly assessed couple for 2025. These new rates will also apply for 2024. The intention behind this is to give some hard-pressed renters extra tax relief. Also, Revenue want to get more landlords into the tax net. To claim the credit, you’ll need to provide details of the rent paid and the person or agent you pay the rent to.
The Mortgage Interest Credit
The mortgage interest credit was brought in for one year only 2023. It applies to the mortgage on your home and not any property you rent. Some of the qualifying conditions include that the balance on the mortgage on 31 December 2022 was between €80,000 and €500,000. Plus, you must be compliant with local property tax.
Once you meet these conditions and the interest you paid in 2023 is higher than the interest paid in 2022 you get the credit. The max credit is €1,250 which is an interest cap of €6,250 multiplied by 20%.
This credit has now been extended to 2024. 2022 will still be the base year so you are comparing the interest paid in 2024 to the amount paid in 2022. You can apply for this in early 2025 when you know what your 2024 interest was. PAYE workers can claim it by completing their tax return through MyAccount. For those in the self-assessment system and file a Form 11 you or your tax advisors can claim this when doing your 2024 tax return.
For our clients that read this, and you haven’t already done your return we look for the relevant details on the checklist we sent to you. The message is that although it seems like a hassle to answer the questions and get the interest certs, we are trying to save you money.
Small Benefit Exemption
The changes to the small benefit exemption are very welcome from an employer and employee perspective. It seems Revenue take a very strict view of what’s a benefit with some crazy findings like cakes and tea and coffee included. This has confused employers who want to keep staff happy and retain them. Even Revenue guidance on the small benefit is very petty with an Easter Egg example used as a benefit. The apprehension among employers is falling foul of the rules inadvertently. This could result in a benefit, like a voucher, given to an employee later in the year becoming taxable.
For 2024 an employee, including a company director, can receive up to 2 benefits with a combined maximum value of €1,000. Say Lucky Luca Ltd gave one of the employees Maria a voucher for a hotel break of €400 in May 2024 and a voucher for Christmas of €500. As there are 2 benefits and the combined total is less than €1,000 then there is no employer or employee taxes on the benefit. But say Luca gave Maria a Cadburys Crème egg in April then that and the hotel voucher are the 2 benefits. As a result, the voucher at Christmas would become taxable and Maria would lose over half its value if she pays tax at the higher rate. Plus, the employer must account for the payroll taxes including employer’s PRSI on the voucher
From 1 January 2025, the number of benefits changes to 5 and the combined maximum value increases to €1,500.
Gifts & Inheritances Thresholds
The new tax-free thresholds are increased as follows
| Group Threshold | New € | Existing € |
| Group A | 400,000 | 335,000 |
| Group B | 40,000 | 32,500 |
| Group C | 20,000 | 16,250 |
The new thresholds apply to gifts or inheritances on or after the 2nd of October 2024. If you get an inheritance the threshold that applies is the date the person dies. For a gift, it’s the date of the gift. Going back to the question from my neighbour, as the person died before the 2nd of October, the Group B threshold of €32,500 applies to an aunt by blood.
The CAT rate remains at 33% and the small gift exemption of €3,000 hasn’t changed either.
Property
Several property-related measures were introduced, and others were confirmed to include
Stamp Duty
A new “mansion tax” comes into effect at a rate of 6% for residential properties with a value greater than €1.5 million. The normal rates continue to apply for the first €1.5 million. These new rates apply from the 2nd of October but there are transitional measures in place where binding contracts are in place by that date.
| Consideration | Residential Rate |
| Less than €1,000,000 | 1% |
| Greater than €1,000,000 and less than €1,500,000 | 2% |
| Greater than €1,500,000 | 6% |
So, properties at the top end of the market just got more expensive. A residential property for sale for €2 million will cost a purchaser €50,000 in Stamp Duty
| First €1,000,000 | 1% | €10,000 |
| Next €500,000 | 2% | €10,000 |
| Balance of €500,000 | 6% | €30,000 |
| Total | €50,000 |
Vacant Homes Tax [VHT]
VHT is a tax that applies to habitable residential properties on a self-assessment basis. If the property isn’t occupied for 30 days in a chargeable period, then the tax applies. The chargeable period runs from the 1st of November to the 31st of October in the following year. The current rate of VHT that applies from 1 November 2023 to 31 October 2024 is 3 times the base LPT liability for that property. From 1 November 2024, the VHT increases to 7 times the base LPT liability of the property.
Pre-Letting Expenses for Vacant Residential Property
The deduction for pre-letting expenses for residential property vacant for 6 months or more has been extended to the end of 2027. Pre-letting expenses of up to €10,000 qualify as a deduction in the first year of letting the property provided the expenses were incurred in the 12 months before the property is let. There is a clawback if the property isn’t let for the first 4 years.
VAT Registration Thresholds
New VAT registration thresholds apply from 1 January 2025. The current €40,000 limit for services increases to €42,500. And the current €80,000 registration limit for goods increases to €85,000. You may opt to register if your turnover is below those numbers. For businesses providing a mixture of goods and services the new registration threshold of €42,500 applies.
All Revenue need to do now is to make the registration process easier. It’s a bit of a nightmare to get VAT registered and you have to be the seventh son of a seventh son to get an EU VAT registration number!
BIK on Company Vehicles
The €10,000 deduction from the original market value of company-provided cars and vans will continue to apply for 2025. This deduction applies to EVs, vans, and cars in the emissions categories A to D.
The current reduction of €35,000 from the original market value of electric vehicles will continue to apply in 2025. That reduction coupled with the €10,000 deduction means the total deduction from the original market value will be €45,000 for electric vehicles in 2025.
Summary
In Budget 2025 and 10 takeaways we talk about the main tax changes. But there are other changes that can impact you and your business. Any budget that puts more money in your back pocket is always welcome especially when prices are increasing. There’s the usual tinkering with credits and rate bands but not a lot of imagination when it comes to investment and planning for the green economy or housing. The increases in the CAT thresholds are welcome but the CGT and CAT rates of 33% are still way too high. Plus, a top rate of USC of 11% for self-employed profits over €100,000 is daylight robbery and very unfair.
I’d expect prices to continue rising in certain sectors like hospitality. With the increase in the minimum wage to €13.50 from January next year and auto-enrolment for pensions, it will squeeze many who are just about surviving as it is. There’s plenty there to discuss with our clients in the coming months and we look forward to pointing them in the right direction to include some planning tips.
Do you want you and your company to receive a super accountancy service? If so, start here
