Navigating Ireland’s Tax Policy Changes – Budget 2024

Mary Drought, FP Tax Manager, delves into three key aspects of the tax policy changes from Budget ’24, and provides insights on how to navigate them successfully.

As we ushered in the new year, Ireland’s fiscal landscape underwent significant transformations with the implementation of Budget 2024. For individuals and businesses alike, staying informed about these changes is crucial for effective financial planning. In this blog post, we’ll delve into three key aspects of the tax policy changes and provide insights on how to navigate them successfully.

Employment and Investment Incentive (EII): Fostering Growth Through Tax Relief.

One of the notable changes introduced in Budget 2024 is the enhancement of the Employment and Investment Incentive (EII). This initiative aims to stimulate economic growth by providing income tax relief for risk capital investments in qualifying small and medium enterprises (SMEs). Investors who support these enterprises can benefit from a reduction in their income tax liability.

Key Points:

From the 1st January 2024, the required investment period will reduce to four years, previously is was seven.
The limit on the amount that can be claimed for relief on such investments will be raised to an impressive €500,000. However, the rate of relief available is being reduced from the standard 40% to 20%-50%. The rate will depend on the status of the company seeking investment and on whether the investment is made directly or through a qualifying investment fund.

To take advantage of the EII, individuals interested in making risk capital investments should first identify qualifying SMEs. Seek professional advice from an experienced accounting firm such as Fitzgerald Power to ensure that your investment aligns with the criteria outlined in the new tax policy. By collaborating with experts, you can navigate the complexities of the EII and optimise its benefits for both your financial portfolio and the growth of qualifying SMEs.

Retirement Relief: Planning for a Secure Future.

Budget 2024 also introduced changes to Retirement Relief, demonstrating Ireland’s commitment to supporting individuals as they plan for their retirement. The adjustments in this relief aim to provide more accessible and attractive options for individuals seeking to secure their financial future through prudent retirement planning.

Key Points:

Starting from 1st January 2025, the age limit for qualifying individuals for the maximum amount of CGT retirement relief is being increased from 65 years to 69 years.
Additionally, there will be a brand-new limit of €10 million on the relief available for disposals to a child until they reach the age of 70. Currently no cap applies unless the disposer is at least 66 years of age.
The age limit for disposals to third parties has also been increased from 65 to 69 for the existing applicable threshold of €750,000.

For those considering retirement relief, it is crucial to assess your current financial situation and understand how the changes in the policy may impact your retirement planning strategy. Consult with our team of tax experts to evaluate your eligibility and determine the most effective way to leverage these changes for your retirement benefit.

Capital Gains Tax Relief for Angel Investment in Innovative Start-Ups: Fostering Entrepreneurship.

In a bid to foster innovation and entrepreneurship, Budget 2024 introduced a new capital gains tax relief for angel investments in innovative start-ups. This measure aims to attract more investors to support the development of cutting-edge businesses, ultimately contributing to Ireland’s reputation as a hub for innovation. Although it was noted in a recent AITI briefing that it is subject to a commencement order, here are the main points outlined.

Key Points:

Available to those who invest in an innovative start-up small and medium enterprise (SME) for a period of at least 3 years. Be in the form of fully paid up newly issued shares of at least €20,000, or €10,000 – €20,000 where the investor holds a stake of at least 5% and no more than 49% of the ordinary issued share capital of the company.
The scheme will include a certification process, carried out by Enterprise Ireland, to ensure the relief is targeted at innovative SMEs that can demonstrate financial viability and compliance with the requirements of the EU General Block Exemption Regulation.
Qualifying investors may avail of an effective reduced rate of CGT of 16%, or 18% if through a partnership, on a gain up to twice the value of their initial investment.
There is a lifetime limit of €3 million on gains to which the reduced rate of CGT will apply.

If you are considering investing in innovative start-ups and want to take advantage of the new capital gains tax relief, it is essential to conduct thorough research on potential opportunities. Collaborate with a knowledgeable accounting firm to assess the eligibility of the start-up and understand the specific requirements to qualify for the relief. This proactive approach ensures that your investment aligns with the new tax policy, maximizing your potential returns while supporting the growth of innovative enterprises.

As the tax landscape evolves, staying informed and seeking professional guidance become paramount. The changes introduced in Ireland’s Budget 2024 present opportunities for individuals and businesses to optimise their financial strategies. By understanding and strategically implementing the Employment and Investment Incentive, Retirement Relief, and the new Capital Gains Tax Relief for Angel Investment, you can navigate these changes with confidence, ensuring your financial well-being and contributing to the growth of the Irish economy

For personalised advice tailored to your specific circumstances, don’t hesitate to reach out to our team of experienced tax professionals here at Fitzgerald Power.

Navigating Ireland’s Tax Policy Changes – Budget 2024

Related Topics

Budget Report 2024