BUDGET 2025 SUMMARY: REPORT FOR SMEs AND THE SELF-EMPLOYED
As we move forward with Budget 2025, presented by Minister Jack Chambers, several critical updates have been made to benefit working individuals, businesses, and key sectors across Ireland. This year’s budget prioritizes both financial relief and the growth of sustainable initiatives, offering strategic incentives for employers, property owners, and the agriculture sector. Below is a breakdown of the most impactful changes that are worth noting:
Income Tax Updates
Budget 2025 introduces several positive adjustments to income tax, credits, and the Universal Social Charge (USC):
- The Standard Rate Cut-Off Point has been increased by €2,000, raising the lower tax threshold from €42,000 to €44,000.
- The USC rate has been reduced from 4% to 3%.
- Key tax credits like the Personal, Employee, and Earned tax credits have all increased by €125.
Example: An individual earning €70,000 annually will now take home an additional €1,000 due to these change.
VAT and Threshold Adjustments
For businesses, VAT thresholds have been raised:
- Goods: From €80,000 to €85,000.
- Services: From €40,000 to €42,500.
Support for Employers
- Small Benefit Exemption: The annual exemption for rewarding employees has increased from €1,000 to €1,500. Additionally, the frequency of benefits allowed per year has increased to five.
- Minimum Wage: Effective 1 January 2025, the national minimum wage will rise by €0.80 to €13.50 per hour.
Encouraging Electric Vehicle (EV) Adoption
Incentives continue for the use of Electric Vehicles (EVs):
- The €10,000 universal relief for Benefit-In-Kind (BIK) on company cars will be extended for another year.
- Additionally, the installation of an EV charger at an employee’s home by their employer will now be exempt from BIK.
Capital Acquisition Tax (CAT)
There has been an increase in the Group A Threshold for CAT, rising from €335,000 to €400,000, representing a tax value of approximately €21,500. Similarly, the Group B and Group C thresholds have also seen significant increases.
Support for the Hospitality Sector
A €4,000 flat-rate payment will be granted to retail and hospitality businesses with annual rate bills under €30,000, offering much-needed support in these sectors.
Retirement Relief
Changes to Retirement Relief have been welcomed by business owners. While the €10 million cap on assets passed to children remains, the CGT will be fully abated if the assets are retained by the children for over 12 years.
Startups and Investments
- Capital Gains Tax Relief for investments in innovative startups has increased, with the lifetime limit rising from €3 million to €10 million.
- Programs like EII, SURE, and the Start-Up Capital Incentive have been extended until the end of 2026.
Property Sector Updates
Changes to Stamp Duty on residential properties valued over €1.5 million:
- New Stamp Duty Rate: Increased to 6%.
- Pre-letting expense deductions for landlords have been extended until the end of 2027.
- The Rent Tax Credit will increase by €250, bringing the total to €1,000 for 2025, and is applicable retroactively for 2024.
Agriculture Sector Enhancements
- Stock Relief for young farmers and partnerships has been extended until the end of 2027.
- The VAT flat rate for farmers will rise from 4.8% to 5.1%.
- More farm safety equipment will qualify for Accelerated Capital Allowances.
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