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  5. TRA Budget 2025

TRA Budget 2025

Tax Credits and Incentives:

R&D Tax Credit: This credit will be increased from €50,000 to €75,000 in the first year to allow greater support for companies investing in research and development. Tax Rates:
  • The standard rate cut-off point is to be increased to €44,000 with proportionate increases for married couples and civil partners.
  • USC to be reduced to 3%
BIK: Temporary universal relief for company cars will be extended for another year. Rent Tax: Rent Tax Credit to be increased by €250, bringing this to €1,000 for individuals and €2,000 for couples. Introduction of a Partial Exemption for Foreign Dividends: This change will be beneficial for companies with overseas income. Employment Investment Incentive: In order to support the growth of businesses, the maximum investment qualifying for this incentive is doubled from €500,000 to €1m. Non-Cash Benefits: The Tax-free limit for non-cash benefits has increased by €500 to €1,500. Help to Buy: Extended to end 2029. Mortgage Interest Tax Relief: Extended for another year.

Check our 2025 Budget Overview

CAT Thresholds increase

The following increases in the tax-free thresholds are to be effective for gifts/inheritances taken on or after 2 October 2024:

  •  The group A category which relates to inheritance by children from their parents will increase to €400,000 (from €335,000).
  •  The group B threshold which relates to inheritances involving grandchildren, siblings, nieces and nephews will increase to €40,000 (from €32,500).
  •  The group C threshold which relates to all other inheritances will increase to €20,000 (from €16,250).

This marks the first update in capital acquisition tax thresholds since Budget 2020.

Amendments to Retirement Relief

The relief currently provides for a clawback of capital gains tax relief payable by a child if they dispose of the relevant assets within 6 years of the transfer by the parent. The 12-year clawback announced by the minister doubles this time period in respect of transfers worth over €10 million.

CGT relief for angel investors

The lifetime cap available to individuals is being increased from €3m to €10m in connection with the lower rate of CGT of 16% for investors in innovative start-up companies, or 18% where an individual invests via a partnership.

Measures to Support Enterprise/SMEs

• VAT: The VAT registration thresholds on the supply of goods and services will be raised to €85,000 and €42,500.
• Stamp duty exemption: To support SME’s to grow and scale, Budget 2025 signalled an intention to introduce a stamp duty exemption for Irish small and medium businesses in the coming year. This is intended to enhance access to funding via financial trading platforms and its introduction is subject to EU State Aid considerations. Further detail on this relief/exemption is forthcoming in the next few months / year.

Climate:

  •  Carbon Tax: Carbon Tax rate per tonne of CO2 emitted on fossil fuels to increase to €63.50 per tonne of CO2 emissions.
  •  EVs: The installation of EV chargers by employers at their workers’ homes to be exempt from Benefit in Kind (BIK).
  •  Heat Pumps: VAT on heat pump installation to be reduced from 23% to 9%.
  •  Energy Subsidy Scheme: A €170m energy subsidy scheme was announced which will benefit 39,000 firms.