Written Answers Nos. 372-391
372. Deputy Michael Lowry asked the Minister for Finance to address the concerns regarding inheritance tax, will he consider reviewing the thresholds in Budget 2025 and provide increased tax-free thresholds and clearer guidance to alleviate the tax burden on young people inheriting family homes and assets, particularly its impact on family homes across Ireland (details supplied); and if he will make a statement on the matter. [35564/24]
Amharc ar fhreagraCapital Acquisitions Tax (CAT) is a tax which applies to both gifts and inheritances. For CAT purposes, the relationship between the person giving a gift or inheritance (i.e. the disponer) and the person who receives it (i.e. the beneficiary) determines the maximum amount, known as the “Group threshold”, below which CAT does not arise.
The Group A threshold is currently set at €335,000 and applies where the beneficiary is a child, including adopted children, stepchildren and certain foster children, of the disponer.
While the thresholds were reduced during the economic downturn, the Government has made changes to the CAT thresholds in recent years. The thresholds have been increased to the extent allowable by the available resources. In Budget 2019, the Group A threshold which applies primarily to gifts and inheritances from parents to their children was increased from €310,000 to €320,000 and again to €335,000 in Budget 2020.
You should be aware that there would be a significant cost in making further substantial changes to the CAT thresholds.
As with all areas of tax policy, CAT is reviewed as part of the annual budgetary and Finance Bill cycle.
373. Deputy Leo Varadkar asked the Minister for Finance given his Department's over-estimate of the cost of tax reductions in recent years (details supplied), whether he has initiated any review or actions to better understand the cause of these over-estimates and if he can give any reassurance that the cost of the tax package for 2025 will not also be over-estimated or over-stated. [35583/24]
Amharc ar fhreagraThe costing of new tax policy measures is a challenging process which frequently, by necessity, involves relying on a number of assumptions. A key limiting factor in the costing process can be the availability of data on the likely take up and potential base. As a result, there is a large degree of uncertainty involved including in relation to behavioural effects. This is acknowledged by many, including the Parliamentary Budget Office in their assessment of the Uncertainty of Budget 2023 Costings, published in 2023.
The Department of Finance's Guidelines for Tax Expenditures sets out a framework and best practice guide to the evaluation and review of tax expenditures. Under the Guidelines tax expenditures are reviewed regularly, with reviews ongoing of the Employment Investment Incentive (EII) and of share-based remuneration (including the Key Employee Engagement Programme (KEEP)). However, full statistics from tax returns may not be available for a certain period after the introduction of a relief allowing for the tax return cycle.
My Department has been working on updating the Guidelines for Tax Evaluation. The updated Guidelines will set out best practice for both ex ante and ex post evaluations, and are due to be published in the coming weeks.
374. Deputy Jim O'Callaghan asked the Minister for Finance his intended response to cross-Border smuggling, and in particular to the increase in seizures of tobacco products, which constitute a serious loss to the Exchequer. [35647/24]
Amharc ar fhreagra382. Deputy Brendan Smith asked the Minister for Finance the new measures his Department and the Revenue Commissioners will implement to deal with the problems of smuggling tobacco (details supplied); and if he will make a statement on the matter. [35823/24]
Amharc ar fhreagraI propose to take Questions Nos. 374 and 382 together.
I am assured that Revenue is committed to targeting the illicit tobacco trade. It implements a range of measures to identify and target the smuggling, supply or sale of illicit tobacco products, with a view to disrupting the supply chain, seizing the products and where possible, prosecuting those involved. Revenue’s strategy also involves developing and sharing intelligence on a national, EU and international basis, the use of analytics and detection technologies and ensuring the optimum deployment of resources on a risk-focused basis. Revenue continues to adopt an agile response to this threat and continually monitors trends in the illicit tobacco trade and adjusts its actions and redeploys its resources in response to new developments or methodologies employed by the criminal gangs involved in that trade.
The smuggling of tobacco products has a transnational and cross border dimension and in addition to Revenue’s ongoing cooperation with An Garda Síochána, I am advised that Revenue also works closely with its counterparts in other jurisdictions including colleagues in Northern Ireland through the Cross Border Joint Agency Task Force (JATF) and international bodies including OLAF (the EU’s anti-fraud agency), Europol and the World Customs Organisation.
Revenue optimises media engagement in terms of successful prosecutions, significant seizures and enforcement initiatives, ensuring the general public is aware of the commitment by Revenue to tackling the illicit cigarette and tobacco trade and to deter those involved. To further encourage the general public to engage with Revenue in its efforts targeting the shadow economy and the supply of illegal tobacco products, Revenue includes a message on all press releases relating to tobacco products notifying that businesses or members of the public can contact Revenue in confidence on the free phone number 1800 295 295 at any time.
I am pleased to acknowledge that Revenue has achieved considerable success in tackling the illicit tobacco trade. In 2023, Revenue had 5,164 seizures of cigarettes valued at €55.7m and 1,673 seizures of tobacco with an estimated value of €7.7m. To the end of August 2024, Revenue had 3,335 seizures of cigarettes valued at €73.1 million and 1,077 seizures of tobacco valued at €30.6m. Further successes, highlighting Revenue’s approach to the illicit tobacco trade include the detection and dismantling of an illicit commercial cigarette factory in Dublin in February 2024.
Revenue’s high detection rate is attributable to its multi-faceted tobacco strategy, continued cooperation and intelligence sharing with other national and international law enforcement agencies, its highly trained staff and its advanced profiling methods and strategic use of appropriate detection technology and assets, particularly its highly effective detector dogs.
The Government has ensured through the Finance Acts over the years that Revenue has the necessary statutory powers to tackle the illicit tobacco trade. I am satisfied that the current legislative framework provides an effective basis for undertaking and continuing its important work in this area. I am assured that Revenue is aware of the threat that tobacco smuggling poses to health, to legitimate business interests and to the Exchequer and I commend Revenue and all the relevant State agencies for their work in this important area.
This Government has been consistent in its strong support for ensuring that Revenue has the necessary resources to fulfil its mandate in respect of functions that are critical for its effective functioning as a tax and customs administration and I remain open to considering any proposals from Revenue that will support its work in combatting fraud, illicit trade and smuggling.
375. Deputy Michael Lowry asked the Minister for Finance if he will extend agricultural tax reliefs beyond December 2024, including agri-stock relief, the flat rate refund, and excise duty relief on agricultural diesel; if he will consider revising the definition of agricultural activities within taxation to encompass diversified farming systems, as well as increasing the category A threshold for agricultural relief from capital acquisitions tax; and if he will make a statement on the matter. [35651/24]
Amharc ar fhreagraAs the Deputy will be appreciate, it is a longstanding practice of the Minister for Finance not to comment in advance of the Budget on any tax matters which might be the subject of Budget decisions.
Decisions regarding taxation measures are made in the context of the annual Budget and Finance Bill processes, at the appropriate time, and having regard to the sound management of the public finances.
Furthermore, proposals for the amendment of tax reliefs must be assessed in accordance with my Department's Guidelines for Tax Expenditure Evaluation. The Guidelines set out the Department’s approach to the evaluation of tax expenditures, either before the introduction of a tax expenditure (ex-ante evaluation), or in reviewing a tax expenditure that is already in existence (ex-post evaluation). The Guidelines describe the limited circumstances in which tax expenditures should be used as a policy tool to achieve public policy goals. It is important to note that a tax-based incentive should only be considered, in limited circumstances, where it would be more efficient than a direct expenditure intervention.
376. Deputy Michael Lowry asked the Minister for Finance the actions being taken to improve access to low-cost finance for farmers, given the reported 17% reduction in SME credit to the agricultural sector since 2017; if he will provide details on any planned initiatives to ensure farmers have sufficient working capital to operate efficiently; and if he will make a statement on the matter. [35652/24]
Amharc ar fhreagraThe Strategic Banking Corporation of Ireland (SBCI) is under the aegis of my Department and delivers loan guarantee schemes to SMEs, including primary producers, on behalf of the relevant Departments (i.e. Department of Agriculture, Food and the Marine, along with Department of Enterprise, Trade and Employment). These aim to make low-cost finance available to farmers so that they can access working capital and further invest in their business.
Schemes currently in operation and open to SMEs in the agriculture sector are the Ukraine Credit Guarantee Scheme (UCGS) and the Growth and Sustainability Loan Scheme (GSLS).
Ukraine Credit Guarantee Scheme (UCGS)
In order to support businesses impacted by the on-going conflict in Ukraine, a State-backed Ukraine Credit Guarantee Scheme was introduced in January 2023, with a lending capacity of €1.2 billion. This scheme is due to remain open for applications until the end of December 2024.
This scheme offers low-cost working capital to SMEs, primary producers and small mid-caps (businesses with fewer than 500 employees) of up to €1 million, on a six-year term, with no collateral required for loans up to €250,000.
Growth and Sustainability Loan Scheme
The Growth and Sustainability Loan Scheme was launched in September 2023, with a lending capacity of up to €500 million. This scheme is underpinned by a counter-guarantee from the European Investment Fund/European Investment Bank Group (EIF/EIBG).
The scheme provides SMEs and Small Mid-Caps, including farmers and fishers, with long-term financing to either:
• encourage the growth and resilience of their enterprise or
• invest in climate action and environmental sustainability measures designed to improve their performance.
Scheme features include:
• Loans ranging from €25,000 to €3 million
• Loan terms for terms of 7 to 10 years.
• Up to €500,000 can be made available on an unsecured basis
The Growth and Sustainability Loan Scheme is available to SMEs and to mid-caps (businesses with between 250 and 3,000 employees), limited to €937,500 due to De Minimis State Aid restrictions.
Beyond these schemes, the Department of Agriculture, Food and the Marine operate a wide range of measures aiming at promoting and supporting the agricultural sector.
377. Deputy Pauline Tully asked the Minister for Finance the estimated full-year cost to increase the number of dogs in the Revenue Commissioners dog unit to 55. [35663/24]
Amharc ar fhreagraI am advised by Revenue that it currently operates 27 detector dog teams, including one team working on behalf of the Department of Agriculture, Food and the Marine.
The year one cost of each detector dog team is approximately €100,000. This includes the cost of a trained detector dog, salary of the handler, training for the handler with the dog, transport, and kennelling arrangements. Subsequent costs associated with each detector dog team is approximately €40,000 per annum. This includes salary, allowances, uniform, food, vet bills and other related costs. Should the number of detector dog teams increase to 55, the estimated full cost in one year, including costs associated with 28 new teams, would be approximately €4m.
I am advised by Revenue that the dog detector teams, although an integral element of Revenue’s compliance framework, are just one component of a suite of detection equipment and technologies deployed to target fraud, illicit trade, smuggling and organised crime. Scan technology is deployed at all points of entry that work in tandem with the dog detector teams.
I am further advised that operational requirements regarding the deployment and use of detection technology and resources, including dog detector teams, are kept under regular review having regard to ongoing risk assessment of smuggling and criminal activities and evolving operational needs.
I am strongly supportive of Revenue having the necessary resources to fulfil its mandate in respect of its responsibilities, responsibilities that are critical for its effective functioning as a tax and customs administration and for the effective functioning of the State generally. I am always open to considering any proposals from Revenue regarding additional resources to support its important work in targeting fraud, illicit trade and smuggling in light of developments and experience.
378. Deputy Jim O'Callaghan asked the Minister for Finance if the 23% VAT rate on panic alarm bills can be reduced and or removed in view of the fact that this is an essential service for elderly people; and if he will make a statement on the matter. [35755/24]
Amharc ar fhreagraThe VAT treatment of goods and services is subject to EU VAT law, with which Irish VAT law must comply. In general, the EU VAT Directive provides that all goods and services are liable to VAT at the standard rate, unless they fall within categories of goods and services specified in Annex III of the VAT Directive, in respect of which Member States may apply a lower rate of VAT.
As panic alarms are not included in Annex III of the VAT Directive it is not possible to apply a reduced or zero rate of VAT to them.
379. Deputy Jim O'Callaghan asked the Minister for Finance if he will amend the finance Acts by reviewing the standard fund threshold in order that senior Gardaí can apply for more senior roles within An Garda Síochána; and if he will make a statement on the matter. [35758/24]
Amharc ar fhreagra380. Deputy Jim O'Callaghan asked the Minister for Finance if he will provide a copy of the review of the standard fund threshold by a person (details supplied); if the recommendations of the report can be made available; and if he will make a statement on the matter. [35759/24]
Amharc ar fhreagraI propose to take Questions Nos. 379 and 380 together.
The Standard Fund Threshold(SFT) is the maximum allowable pension fund on retirement for tax purposes which was introduced in Budget and Finance Act 2006 to prevent over-funding of pensions through tax-relieved arrangements and it applies to all private and public sector pension arrangements. It is provided for in Chapter 2C of Part 30 of the Taxes Consolidation Act 1997 (TCA) which sets out the maximum tax-relieved pension fund at retirement. If the relevant threshold is exceeded, the excess over the threshold (the “chargeable excess”) is subject to an upfront, ring-fenced income tax charge (known as “chargeable excess tax”) at 40%.
The Deputy raises the matter of reviewing the SFT in the context of recruitment and retention within An Garda Síochána. I would note that the terms and conditions of positions in An Garda Síochána are a matter at the first instance for the Ministers for Justice and Public Expenditure, National Development Plan Delivery and Reform and are outside the scope of my responsibilities. The SFT is part of the tax system which applies to generally for everyone; all pension products or schemes, and both the public and private sector.
In December 2023, the then Minister for Finance announced an independent examination of the SFT regime, including consideration of the impacts of the SFT on recruitment and retention in the public and private sector. This examination which was led by an independent expert has recently concluded and a report was submitted to me. I am continuing to consider the report and its recommendations. The appropriate timing for publication of the report forms part of this consideration. As the Deputy would expect, any changes to the SFT regime will be carefully considered as part of the Budgetary process.
381. Deputy Michael Healy-Rae asked the Minister for Finance if he plans to abolish the levies on ESB pensions; and if he will make a statement on the matter. [35776/24]
Amharc ar fhreagraAs the Deputy will be aware the pension fund levy was introduced at a time when the economy was in very serious difficulties. The intent of the levy was to raise revenue in respect of the generous tax reliefs that those contributing to pension arrangements had benefited from over many years. It was charged on the market value of assets in pension schemes held on 30 June in each year at a rate of 0.6% (2011 to 2013), 0.75% (2014) and 0.15% (2015). It is important note that this levy was discontinued from 2016.
Liability for the levy rested with trustees of pension schemes and others responsible for the management of pension fund assets. Under the legislation, the payment of the levy was treated as a necessary expense of a pension scheme and it was a matter for the trustees or insurers to decide when and how the levy should be passed on to scheme members and to what extent, given the particular circumstances of the pension schemes for which they were responsible. This was the case for all pensions scheme.
I have no detailed information on the decisions made by any pension fund trustees or others in relation to the passing on of the full or a partial impact of the levy to the current, deferred or former (retired) members of pension schemes. Therefore, I am not in a position, nor is it within my remit, to comment on the specifics relating to the application of the pension levy to ESB pensions.
I am aware, however, that where trustees have made the decision to pass on the impact or part of the impact of the levy to pensioners that a smaller reduction in pension payments over the lifetime of the pension may have been made in many cases in preference to a larger reduction over a shorter period and this may be the case for this pension fund.
383. Deputy Paul Kehoe asked the Minister for Finance to consider reducing tax on savings for retired persons (details supplied); and if he will make a statement on the matter. [35835/24]
Amharc ar fhreagraI am advised by Revenue that the amount of income tax that an Irish tax resident individual must pay on income depends on a number of factors.
In general, an individual will be charged to tax at the standard rate (20%) up to what is known as the standard rate cut off point. The standard rate cut off point for 2024 is €42,000 per individual. Any income earned in excess of that is charged to tax at 40%. USC and PRSI will also generally apply. Further information on these rates and bands is available on the Revenue website at: revenue.ie/en/jobs-and-pensions/calculating-your-income-tax/index.aspx. There are certain limited types of income which are not taxed in this manner and deposit interest is one of those sources.
Also of relevance to a retired individual is an exemption from income tax which can apply if an individual, or that individual’s spouse or civil partner, is aged 65 or older and the annual exemption limit applies. The annual exemption limits apply where the individual’s total income (including interest income) is below €18,000 in the case of a single person or the couple’s total income is below €36,000 in the case of a married couple or civil partnership. Further information on this exemption is available on the Revenue website at revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/marital-and-civil-status/exemption-and-marginal-relief/index.aspx. This exemption applies to deposit interest as well as income from other sources.
How deposit interest is taxed (where the age exemption does not apply) depends on the source of the deposit interest.
• Irish sourced deposit interest: Savings with an Irish bank, or other deposit taker such as a credit union or An Post, are generally subject to Deposit Interest Retention Tax (DIRT) at a rate of 33%. Where applicable, DIRT will be deducted by the deposit taker.
• EU-sourced deposit interest: Interest on savings with an EU bank or other deposit taker is generally taxed at the same rate as DIRT (i.e. 33% in respect of interest paid or credited on or after 1 January 2020).
• Non-EU sourced deposit interest: Interest on savings with a non-EU bank or other deposit taker is taxed at the higher of the DIRT rate and the individual’s marginal rate of tax. That is, if the individual is a standard rate (20%) taxpayer, their deposit interest is taxed at the DIRT rate (33%) but if they are a higher rate (40%) taxpayer, their interest will be taxed at 40%.
USC does not apply to deposit interest, and PRSI may apply.
As with all areas of tax policy, the taxation of savings and investments will be kept under review throughout the annual budgetary process.
384. Deputy Richard Bruton asked the Minister for Finance if there has been any evaluation of the tax incentives for the purchase of bikes and electric bikes; and if he will consider an extension beyond those with participating employers. [35859/24]
Amharc ar fhreagraSection 118(5G) of the Taxes Consolidation Act 1997 (TCA) provides for the Cycle to Work Scheme. This scheme offers an exemption from benefit-in-kind (BIK) where an employer purchases a bicycle and/or associated safety equipment for one of their employees (or directors) to use, in whole or in part, to travel to work. Associated safety equipment may include items such as helmets, lights, bells, mirrors and locks.
The amount of exempted expenditure depends on the type of bicycle purchased and includes related safety equipment. Since 1 January 2023, the scheme applies to the first:
• €3,000 of expenditure in relation to a cargo or e-cargo bike;
• €1,500 of expenditure in relation to a pedelec or e-bike; or
• €1,250 of expenditure in relation to any other type of bike.
Under section 118B TCA, the employer and employee may also enter into a Revenue-approved salary sacrifice arrangement under which the employee agrees to sacrifice part of his or her salary in exchange for a bicycle and/or related safety equipment.
The Cycle to Work scheme was extended in Financial Provisions (COVID-19) (No. 2) Act 2020 to increase the threshold on the value of eligible expenditure from €1,000 to €1,500 for pedelec or electric bikes and €1,250 for all other bikes and allow for the BIK exemption once every four years rather than once every five. The scheme was further expanded by Finance Act 2022 to include cargo and e-cargo bikes, providing for up to a €3,000 on related tax-free expenditure.
The scheme is available to all employers operating in the State. It is important to note, however, that employers are not required to take part. The key incentive to employers to participate is that employer’s PRSI is not payable on the cost of the BIK when they make the associated deduction from their employees' salary payments.
It should be noted that BIK is a charge to tax which applies where an employer provides an employee with a benefit, such as a bicycle, car or accommodation. Therefore, the Cycle to Work scheme is only applicable where the bicycle and/or related safety equipment is provided by an employer to either their director or someone in their employment. Where an employer-employee relationship does not exist, for example, in the case of self-employed or retired persons, such individuals can’t qualify for the scheme.
While the Cycle to Work scheme is kept under review by officials, I have no plans at present to amend the scheme. Furthermore, as the Deputy will appreciate, the expansion of any tax expenditure measure creates a cost to the Exchequer and that cost must be recovered elsewhere.
385. Deputy Richard Bruton asked the Minister for Finance his plans for the low-income exemption threshold for persons aged 65 years and over, now that the combined value of the personal credit and the credit for a PAYE or self-employed income exceeds the value of the exemption; and if he will make a statement on the matter. [35860/24]
Amharc ar fhreagraAs the Deputy will be aware the age exemption applies for any year of assessment where an individual is aged 65 years and his or her total income does not exceed €18,000 per annum. Where an individual is a married person or civil partner and is jointly assessed to tax, the age exemption will apply where either individual is aged 65 or over and where the couple’s total income does not exceed €36,000 per annum. The relevant income thresholds may be increased further if the individual has a qualifying child.
Additionally marginal relief may be available where the individual’s or couple’s income exceeds the relevant exemption limit but is less than twice that amount. Once the income exceeds twice the exemption limit, marginal relief is no longer available and the individual pays tax under the normal tax system. However, where the individual’s income is greater than the exemption limit but below twice that limit, the taxpayer is entitled to the benefit of the more favourable treatment between the use of marginal relief or the normal tax system of credits and bands.
It is also worth pointing out that where an individual or couple no longer benefits from the age exemption or marginal relief they will benefit from the increases to the main personal tax credits in recent Budgets.
The increases to the main personal tax credits in Budget 2024 (€100 increase to the single, employee and earned income credits and a €200 increase to the credit for married couples/civil partnerships) means that the effective entry point to income tax has increased for all taxpayers, including those aged over 65. From 2024, the effective entry point to income tax for an individual in receipt of the single person credit, employee/earned income credit and the age credit has increased by €1,000 per annum from €18,975 to €19,975 per annum.
I have no plans to increase the age exemption limits. However, it is important to take into account that the current tax arrangements for persons aged 65 or older compare favourably with the tax treatment of the generality of taxpayers. Persons aged 65 or over may also avail of the age tax credit, which currently amounts to €245 per year for single persons or €490 per year for married couples or civil partners. Reduced rates of USC also apply for persons aged 70 or older where their total income is €60,000 or less per annum. Social welfare income such as the State Contributory Pension and State Non-Contributory Pension are excluded from the calculation when determining if an individual’s income has exceeded the €60,000 income threshold. Furthermore, the State Contributory Pension and the State Non-Contributory Pension are not chargeable to USC or Pay Related Social Insurance.
The Commission on Taxation and Welfare recommended that age should be removed as a factor for determining the charge to income tax and USC. The report stated that the determination of an individual’s tax treatment based on age narrows the base and breaches the concept of horizontal equity, whereby those with similar income should pay the same proportion of that income in taxes. It also breaches the concept of intergenerational equity. Further details are set out in the Report of the Commission, at the following link: gov.ie/en/publication/7fbeb-report-of-the-commission/
Finally, as part of the Personal Tax Review published on last year’s Budget Day, my Department set out further analysis of the recommendations of the Commission on Taxation and Welfare, including in respect of the age exemption limits. The Report is available at the following link: gov.ie/pdf/?file=https://assets.gov.ie/273335/96f70eb1-64e1-4f02-9096-e36f306a048b.pdf#page=null
386. Deputy Richard Bruton asked the Minister for Finance the take-up of the microgeneration tax credit; and if he will make a statement on the matter. [35861/24]
Amharc ar fhreagraSection 216D of the Taxes Consolidation Act 1997 provides that up to €400 per year of profits arising to an individual from the generation of electricity from renewable, sustainable or alternative sources of energy at the individual’s sole or main residence (referred to as the microgeneration of electricity) is exempt from Income Tax, USC and PRSI. The exempt amount was increased from €200 to €400 per year by section 28 of Finance (No.2) Act 2023.
There is no requirement to include the exempt profits in an income tax return. However, should an individual have profits exceeding €400 from the microgeneration of electricity in a year of assessment, the excess is taxable and must be declared on a tax return and will be subject to income tax, USC and PRSI in the usual manner.
As there is no requirement to include the exempt profit in an income tax return, I am informed by Revenue that they do not have statistics on the take up of the exemption.
387. Deputy Richard Bruton asked the Minister for Finance the basis of calculation of the differential in the standard rate cut-off point between single persons, single parents and couples with one earner; when these differentials were last changed; and the levels that they would now be at if indexed to average earnings, or if indexed to the rise in the value of the single person’s SCP over the intervening years. [35862/24]
Amharc ar fhreagraTable 1 below sets out the current value of the standard rate bands that apply to different household types:
Table 1 – 2024 Income Tax Standard Rate Bands
|
Personal Circumstances |
Standard Rate Bands |
|
Single |
€42,000 |
|
Single Person qualifying for the SPCCC* |
€46,000 |
|
Married/civil partner – one earner |
€51,000 |
|
Married/civil partner – two earners |
€84,000 |
* If you care for a child on your own, you may be able to claim the Single Person Child Carer Credit (SPCCC)
Prior to 2000, the income tax system allowed for full joint assessment of married couples. This meant that a married one earner couple could use the combined tax credits and standard rate band available to both individuals – i.e. double the personal tax credit and standard rate band available to a single earner. As a result, where the primary earner of a married couple had sufficient income to use the available reliefs in full, the second earner faced the marginal rate of income tax from the first pound of income earned, which acted as a disincentive to workforce participation for second earners.
A process of moving towards an individualised system of income taxation began in the tax year 2000/2001 with initial steps being taken to individualise the tax bands. The stated economic objective behind the move was to increase labour force participation and reduce the numbers of workers paying the higher rate of income tax. This was in line with other European countries who made similar moves towards a partial or fully individualised income taxation system on grounds that it improves equality and economic independence for women.
The current hybrid system has been maintained for over 20 years. Since 2001 up to €9,000 of the standard rate band can be transferred between spouses and the married personal tax credit, can be allocated in full to one spouse.
In lieu of fully transferable rate bands, a Home Carer Tax Credit may be claimed where one spouse works primarily in the home to care for a dependent person, such as a child. This credit was introduced in recognition of the choices made by families where one spouse stays at home to care for children or the elderly. In recent years, the value of the credit has been increased in line with a commitment in the Programme for Government and currently stands at €1,800.
Since 2014 a single parent may be eligible for the SPCCC. This credit also provides an entitlement to a €4,000 extended standard rate band.
Table 2 below sets out the estimate values of the single, married/civil partner one earner and the single person qualifying for the SPCCC, standard rate bands if these income tax bands had been index linked to average earnings. However, it is important to note that during this timeframe of over 20 years, the economy experienced many events, including an economic boom, global financial crisis, economic recovery and the Covid-19 pandemic for example. Therefore, the current levels of the standard rate bands reflect the policy choices adopted by various Governments in response to the prevailing economic circumstances and the fiscal resources available.
Table 2 – Income Tax Standard Rate Bands indexed to wages per head
|
Personal Circumstances |
Period |
Value |
|
Single |
2000 to 2024 |
€48,148 |
|
Married/civil partner – one earner |
2000 to 2024 |
€79,306 |
|
Single Person qualifying for the SPCCC |
2014 to 2024 |
€51,167 |
It should be noted that the Department’s average wage forecasts are based on total employee compensation as per the CSO’s Quarterly National Accounts expressed on a per employee basis. This comprehensive measure based on employee earnings data from Revenue captures the average remuneration paid by employers to employees and includes wages and salaries as well as employer’s social contributions. In addition, the values provided are based on the Stability Programme Update 2024 average wage forecast.
Finally, if the married/civil partner standard rate band had been increased at the same rate as the single standard rate band, then the value of this standard rate band would now stand at €69,186. However, Government policy has been to maintain the €9,000 differential between this band and the single person standard rate band.
388. Deputy Richard Bruton asked the Minister for Finance the take-up of the mortgage relief scheme in Budget 2024; the average value of the relief paid; and if any provision has been made for renewing it for a further year. [35864/24]
Amharc ar fhreagraMortgage Interest Tax Relief is a one-year temporary relief, which is available to taxpayers in respect of their principal private residence in the State, where the outstanding mortgage balance was between €80,000 and €500,000 as of 31 December 2022. The relief also extends to a qualifying property located in the State, which is the sole or main residence of the individual’s former or separated spouse or civil partner or a dependent relative.
The tax relief is at the standard rate of income tax and is based on the increase in interest paid in 2023 over interest paid in 2022. The value of the relief will be equal to the lesser of 20 per cent of this excess interest figure, or €1,250. This means that the maximum tax relief will be €1,250 per property.
Where the interest payments made in respect of either the 2022 or 2023 tax years are not for a full year, pro-rating of the relief will apply, to ensure interest is applied on a period of equivalence basis and that the cap is adjusted accordingly. Revenue’s systems will carry out the calculation of the relief at the point of claim.
In order to avail of the relief, the taxpayer must file a 2023 Income Tax Return and upload certificates of mortgage interest for both 2022 and 2023, together with confirmation of their mortgage balance as of 31 December 2022. Furthermore, the taxpayer must be compliant with Local Property Tax requirements and must have paid income tax in 2023. The relief operates by way of a credit offset against a taxpayer’s income tax liability for 2023.
I am advised by Revenue that as of 4 September 2024, 25,283 taxpayer units made claims for the Mortgage Interest Tax Relief totalling €17.2 million on their 2023 PAYE income tax return. 22,651 claimants received a refund of tax, which may have included a refund in respect of other credits and reliefs, such as health expenses. The total of refunds issued is over €21.8 million, and the average refund per taxpayer unit is €964.52.
A further 2,329 claimants are either in a balanced position or had an underpayment reduced by the credit being applied to their record. The remaining 303 claimants are not in a position to benefit from the credit as they did not pay Income Tax in 2023.
Finally, information is not yet available for self-assessed taxpayers as these taxpayers have until 31 October 2024 to submit their 2023 Income Tax Return.
As the Deputy will be aware, it is a longstanding practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.
389. Deputy Richard Bruton asked the Minister for Finance the take-up of the landlord relief announced in Budget 2024; the cost of the relief; and if he will make a statement on the matter. [35865/24]
Amharc ar fhreagraBudget 2024 contained a suite of measures in the context of housing policy including the introduction of a new tax relief known as Residential Premises Rental Income Relief (RPRIR). RPRIR provides relief, at the standard rate, on a portion of a landlord’s residential rental income.
The relief is €3,000 in the tax year 2024, €4,000 in the tax year 2025 and €5,000 in the tax years 2026 and 2027, which is equivalent to a tax credit of up to €600, €800 and €1,000 respectively.
I am advised by Revenue that as RPRIR applies to income from the tax year 2024 onwards and given that there are qualifying conditions as at 31 December 2024 that need to be satisfied, no claims have been received to date and are not expected to be received until 2025.
The first year cost of RPRIR is estimated to be €45 million and the full-year cost is estimated to be €160 million.
Further information on RPRIR is available at the following link: revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/rprir/index.aspx
390. Deputy Richard Bruton asked the Minister for Finance the rate of VAT on energy products; if an increase in this rate before the end of 2024 is scheduled; and if he will make a statement on the matter. [35866/24]
Amharc ar fhreagraThe reduced VAT rate of 13.5% applies to the following energy products and supplies:
- The supply of coal, peat and other solid substances offered for sale solely as fuel.
- The supply of hydrocarbon oil of a kind used for domestic or industrial heating, excluding gas oil (within the meaning of section 94(1) of the Finance Act 1999), other than gas oil which has been duly marked in accordance with Regulation 29(2)(a) of the Mineral Oil Tax Regulations 2012 (S.I. No. 231 of 2012).
The reduced VAT rate of 9% applies until 31 October 2024 to the following energy products and supplies:
- The supply of electricity, but not the distribution of electricity if the distribution is wholly or mainly in connection with the transmission of communication signals.
- The supply of gas of a kind used for domestic or industrial heating or lighting, whether in gaseous or liquid form, but not including—
(a) "vehicle gas" within the meaning of section 94(1) of the Finance Act 1999,
(aa) "liquefied petroleum gas" within the meaning of section 94(1) of the Finance Act 1999 when used or intended for use as a "propellant" within the meaning of that section,
(b) gas of a kind normally used for welding or cutting metal, or
(c) gas sold as lighter fuel.
Following which the VAT rate is scheduled to revert to 13.5%.
As the Deputy will be aware, it is a longstanding practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.
391. Deputy Richard Bruton asked the Minister for Finance the present ceiling on the price of a home eligible under the help-to-buy scheme; if he is considering a revision in the ceiling, bearing in mind the trend in house prices; if considers that a regional differential should apply bearing in mind the substantial difference in the cost of a standard home in different parts of the country; and if he will make a statement on the matter. [35870/24]
Amharc ar fhreagraThe Help to Buy (HTB) incentive is a scheme to assist first-time purchasers with the deposit they need to buy or build a new house or apartment. The incentive gives a refund on Income Tax and Deposit Interest Retention Tax paid in the State over the previous four years, subject to limits outlined in the legislation. Section 477C Taxes Consolidation Act 1997 outlines the definitions and conditions that apply to the scheme.
An increase in the supply of new housing remains a priority aim of Government policy. HTB is specifically designed to encourage an increase in demand for new build homes in order to support the construction of an additional supply of such properties. For a property to qualify for HTB, it must be new or converted for use as a dwelling, having not been previously been used as a dwelling. Additionally, the purchase value/approved valuation of the property must not exceed €500,000.
To the end July 2024 (the latest period for which data are available), 49,910 HTB claims have been made, of which 88% of claims were for properties which did not exceed €450,000 in value.
An independent review of the scheme was carried out in 2022. While this review included a number of recommended amendments to the scheme, it did not recommend an increase to the €500,000 house price limit.
It remains the case that, as with any tax expenditure, HTB will be kept under regular review. However, there are currently no plans to extend the scheme to properties valued at over €500,000.
