Your guide to the Budget 2024 on VAT and Environment taxes

Your guide to the Budget 2024 on VAT and Environment taxes

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Against an uncertain economic backdrop, ministers set out their proposals for yet another ‘Cost of Living Budget’ for 2024. Michael McGrath (Minister for Finance) and Paschal Donohoe (Minister for Public Expenditure) sketched out a plan for spending increases, one-off payments and tax cuts worth billions – or roughly €800 per person.

With global inflation still high and inflation rates continuing to ratchet Northwards, taxpayers will derive some comfort from an extension of the temporary 9% VAT rate on electricity and gas until the end of October 2024.

There’s also welcome news on the excise duty increases due from 1 November 2023 – 8 cents per litre for petrol, 6 cents on diesel and 3.4 cent for Marked Gas Oil (MGO) – all including VAT. These have now been deferred in two instalments: 1st April and 1st August 2024.

This budget also showed the Government’s continued zeal for Investing in the future of the planet, with the seeding of a new Future Ireland Fund – projected to grow to €100 billion by the middle of the 2030s – along with another €14 billion stashed away into the Infrastructure, Climate and Nature Fund by 2030. €380m will also be bundled into community and residential energy schemes to cut greenhouse gas emissions and energy bills – and Vehicle Registration Tax Relief for Battery powered Electric Vehicles will now continue till the end of 2025.

In a similar vein, the Zero VAT rate on supplying and installing Solar Panels in private dwellings is to be extended to schools from 1/1/2024, and e-books and audiobooks will also be Zero-rated – a measure so obvious that many will wonder why it hasn’t been done before.

Support for hard-pressed farmers is to be pulled away, with the flat rate addition paid to farmers not registered for VAT (meaning they can’t claim back on their purchases) being dropped from 5% to 4.8% from New Year’s Day.

However, support for charities (who also can’t reclaim VAT) has been stepped up dramatically.  The total annual fund available for charities to claim compensation for non-recoverable purchase VAT will expand from €5 million to €10 million from 1st January.

Of course, it will come as no surprise that all this will be paid for by you – through such measures as a hike in the Carbon tax (from €48.50 to €56 per ton) with auto fuels due to go up from 11/10/23 (diesel by 2.5c and petrol by 2.1c) and other fuels from 1/05/24.

And finally, in the first change to the VAT registration thresholds in Ireland since 2008, the VAT turnover thresholds will increase from €37,500 to €40,000 for service businesses and from €75,000 to €80,000 for businesses which supply goods.

Taking effect from 1st January, 2024, this change is the precursor to a package of EU-wide measures, aimed at simplifying the SME VAT compliance rules coming in on 1st January 2025.

If you’d like to discuss how any of these changes will affect your organisation, just get in touch with your Xeinadin partner, who will be pleased to talk through the details.

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