Budget Summary

Summary of the main measures in the most recent budget including those affecting the farming sector

Budget 2023*

• Income Tax rates, bands & credits
• PRSI and USC
• Stock Relief
• Stamp Duty
• Capital Acquisitions Tax (CAT) and Capital Gains Tax (CGT)
• Other Miscellaneous Taxes
• Social Welfare
• Other Measures

Selected Specific Measures Relating to Agriculture

Download Budget 2023 Summary (PDF)

Main headline items

• The income tax standard rate bands have been increased by €3,200. The income tax rates of 20% & 40% have not been changed
• There has been a €75 increase in the principle tax credits
• An adjustment has been made to the 2% USC band
• The two special stock relief measures for registered farm partnerships and for young trained farmers are being extended until the end of 2024
• There are no changes to the Capital Gains Tax (CGT), Capital Acquisitions Tax (CAT) and Stamp Duty rates.
• Stamp Duty relief for Young Trained Farmers has been further extended until 31st December 2025
• Farm Consolidation Relief - Stamp Duty and Farm Restructuring Relief - Capital Gains Tax has been extended until 31st December 2025
• The VAT flat rate farmer addition rate is to decrease from 5.5% to 5% from 1st January 2023
• There have been significant changes to Social Protection Payments for 2023 with a general €12 weekly increase applied
• Additional funding has been allocated for specific measures relating to Agriculture. 

Income Tax Rates, Bands and Credits

The standard rate bands have been increased as shown below with the income tax rates of 20% & 40% remaining unchanged for 2023 

 Selected Tax Credits

There has been an increase of €75 in the principle tax credits with €100 added to the Home Carer Tax Credit

Tax Credits are applied as a straight deduction from an individual’s income tax - as calculated by applying the two tax rates and using the bands outlined above.

*The Earned Income tax credit is calculated at 20% of an individual’s earned income, excluding earned income that is taken into account for the PAYE Tax Credit, subject to a maximum of €1,775. Where an individual has earned income that qualifies for the Earned Income Tax Credit and PAYE Tax Credit, the combined tax credits cannot exceed €1,775 

Age Exemption Limits

There are income thresholds set for people aged above 65 years and below which they can earn income and pay no income tax. These thresholds remain unchanged for 2023.

Single - €18,000
Married - €36,000 

PRSI and USC

PRSI

Farmers pay the self-employed rate of PRSI known as Class S PRSI. This is applied to all income and there is only one rate so no bands apply.  The Class S rate remains unchanged at 4%.

‘Reckonable income’ for the purposes of PRSI is profit after capital allowances but before reliefs and deductions.

In line with the proposed changes to the State Pension from 2024 it is expected that there will likely increases in PRSI from 2024 onwards.

Universal Social Charge

The Universal Social Charge is payable on gross income after relief for certain trading losses and capital allowances, but before relief for pension contributions.

The lower exemption threshold above which income becomes liable to the USC will remain at €13,000 for 2023. So where an individual earns below this amount no USC applies. Where the income exceeds €13,000 in 2023 then the revised rates showing a €1,625 increase in the 2% band ceiling applies for 2023 are as in the table below. 

* Self-employed individuals with annual income exceeding €100,000 are subject to a 3% additional surcharge – an effective 11% rate of USC. Those in receipt of PAYE income only in excess of €100,000 will be subject to a max USC rate of 8%.

The USC concession for medical card holders is being extended for a further year to 31 December 2023. Reduced rates of USC apply to individuals who have a full medical card and whose income is €60,000 or less. The reduced rates of USC are 0.5% on the first €12,012 and 2% on the balance. 

The marginal rate of tax for employed / self-employed individuals (under 70 years) with a maximum income below €70,044 is as follows:

Stock Relief

Stock Relief for Registered Farm Partnerships and Stock Relief for Young Trained Farmers have been extended until 31 December 2024.  These measures come under the State Aid Rules and the extension is contingent on the update of the EU Agricultural Block Exemption Regulation (ABER).

The Teagasc “My Farm – My Plan” document is the business plan template agreed with Revenue for certification for the enhanced stock relief for young trained farmers

This business plan template is available here 

The business plan must be submitted for certification on or before 31^st October in the year following the first year of assessment.

General Stock Relief, which is available to all farmers at the 25% rate, was extended last year until 31st December 2024. 

Stamp Duty

There was no change to the stamp duty rates applying to either residential or non-residential property.

Non Residental Property

Entire consideration 7.5%

Residental Property

Up to €1,000,000 - 1%
Over €1,000,000 - 2%

Consanguinity relief for Stamp Duty - no change

Consanguinity Relief for inter-family farm transfers of non-residential property is in place until  31st December 2023.  The relief reduces the effective rate applied on lifetime land transfers by gift between certain related persons from 7.5% to 1% .

Consanguinity relief applies to transfers between related persons.- i.e. blood relations including lineal descendant, parent, grandparent, step parent, husband or wife, brother or sister of a parent or brother or sister, or lineal descendant of a parent, husband or wife or brother or sister & foster children.

Stamp Duty Relief for Young Trained Farmers

This relief has been extended until 31st December 2025. This measure comes under the State Aid Rules and the extension is contingent on the update of the EU Agricultural Block Exemption Regulation (ABER).

Budget 2016 introduced an additional requirement (specified by the European Commission under State Aid rules) that the Young Trained Farmer applicant must complete a Business Plan and present it to Teagasc for certification prior to claiming this relief.

The Teagasc My Farm-My Plan document is the Revenue approved business plan template. 

EU State Aid Cap on measures applying to young farmers

Note as per Finance Act 2019 in order to comply with EU State Aid regulations, an overall lifetime cap of €70,000 per farmer applies on the effective tax saving/ benefit claimed under the following three
reliefs/credits

• Young trained farmers stamp duty relief
• Enhanced stock relief for Young Trained farmers
• Succession farm partnerships tax credit

Stamp Duty—Farm Consolidation Relief

This relief has been extended to 31st December 2025.

This measure comes under the State Aid Rules and the extension is contingent on the update of the EU Agricultural Block Exemption Regulation (ABER)

Consolidation relief may apply where land is disposed of and replaced with other land with the end result of a less fragmented and more viable farming operation.

Purchase and sale transactions that take place between the dates of 1st January 2018 to 31st December 2025 are potentially eligible for the relief.  The two land transactions involved in the consolidation must occur within 24 months of each other.

A certificate from Teagasc will be required stating that the transactions involved in the consolidation meet the conditions set out in guidelines - guideline document can be accessed here.

Claimants of the relief must commit to retaining ownership of their interest in the qualifying land and use the land for farming for a period of 5 years from the date of first claiming the relief.

The relief has the effect of reducing the rate of stamp duty applying on eligible transfers of land from 7.5% to 1% on the excess of the value of land purchased over the value of land sold as part of the consolidation transactions. 

Capital Acquisitions Tax (CAT) & Capital Gains Tax (CGT)

The rate of CAT is unchanged at 33% and there has been no change in the thresholds.

Group A Threshold - Son/Daughter, minor child of deceased child - €335,000
Group B Threshold - Lineal Ancestor/ Descendent, brother, sister, niece, nephew - €32,500
Group C Threshold - Any other person - €16,250

Capital Acquisitions Tax—Agricultural Relief - no change

The conditions for a donee - a person receiving a gift or successor a person receiving an inheritance to avail of CAT - agricultural relief as follows:

• They must continue to meet the Farmer Test - the 80% agricultural property test
• The eventual user of the property subject to the relief must meet the Active Farmer test as set out below.

To meet the Active Farmer test the final user of the agricultural property must either:

• Hold or obtain within 4 years of receiving the property a recognised agricultural qualification as listed for the young farmer stamp duty exemption qualifications listed in schedule 2,2A or 2B to the Stamp Duties Consolidation Act 1999 and who farms the property on a commercial basis with a view to the realisation of profits for a period of 6 years from the valuation date for the property or
• Spend 50% of that individual’s normal working time* farming agricultural property including the property received on a commercial basis with a view to the realisation of profits for a period of 6 years from the valuation date for the property or
• Lease the whole or substantially the whole of the agricultural property, comprised in the gift or inheritance for a period of not less than 6 years commencing on the valuation date of the gift or inheritance, to an individual who satisfies either of the previous two criteria.

*Definition of “normal working time”

• Normal working time including both on-farm and off-farm working time approximates to 40 hours per week.
• An individual spending an average of 20 hours per week working on the farm will meet the 50% of normal working time criteria.
• Where it can be shown that an individual’s normal working time is less than 40 hours a week, then the 50% requirement will be applied to the actual hours worked, subject to the overriding requirements that the farm be farmed on a commercial basis and with a view to the realisation of profits.

Capital Gains Tax (CGT) - no change

The general rate of CGT is unchanged at 33%

Capital Gains Tax Retirement Relief - no change

There were no changes to the general conditions or operation of Retirement Relief from Capital Gains Tax announced in this budget

CGT Farm Restructuring Relief

To enable farm restructuring, relief from Capital Gains Tax has been available, subject to conditions where land disposed of by either sale or exchange and the proceeds have been reinvested into other land.

The deadline for the completion of the first restructuring transaction is 31st December 2025. This measure comes under the State Aid Rules and the extension is contingent on the update of the EU Agricultural Block Exemption Regulation (ABER)

Both restructuring transactions must be completed within a 24 month period.

The guideline document for CGT Farm Restructuring Relief & Consolidation Relief from Stamp Duty is available here 

Capital Gains Tax—Entrepreneur Relief - no change

Under this relief a reduced rate of 10% applied to gains on the disposal of business assets.  A limit of €1 million applies on all gains which are deemed eligible counted back from 1st January 2016.
From 1st January 2021 an individual who held at least 5% of the shares in a qualifying company will be able to qualify for the relief.  All other qualifying criteria remain unchanged.

More details on the operation of this relief are available here on the revenue website   

Other Miscellaneous Taxes

Corporation Tax

For farms that are trading as companies there is no change proposed to the corporation tax rate which will remain at 12.5%.

Value Added Tax (VAT)

The flat rate farmer addition rate is to decrease from 5.5% to 5% from 1st January 2023 

The VAT rate applying to sales and purchases of livestock remains at 4.8%.

The standard rate of VAT remains at 23% and the 13.5% rate remains unchanged with the exception of the sectors outlined below.

• The 9% VAT rate for the hospitality sector, including restaurants, guest accommodation, cinemas, theatres, sporting facilities is in place until 28th February 2023
• There has also been an extension on the 9% VAT rate for gas and electricity until 28 February 2023.
• A zero VAT rate has been introduced for newspapers including digital additions.

Deposit Interest Retention Tax (DIRT) - no change

This is a tax on interest paid or credited on deposits of Irish residents. There has been no change in the DIRT rate applied  - it remains at 33%.

Dividend Withholding Tax (DWT) - no change

The rate of Dividend Withholding Tax remains at 25%.

Vacant Homes Tax

The tax will apply to long-term vacant residential property and will be paid by property owners. “Long term”, in this instance, refers to properties which are unoccupied for twelve months or more. A property will be considered vacant for the purposes of the tax if it is occupied for less than 30 days in a 12- month period.  The tax will apply to buildings which are residential properties for the purposes of LPT. This means that it will not apply to derelict properties or properties unsuitable for use as a dwelling which are not captured under the LPT system. The tax will be charged at a rate equal to three times the property’s existing base Local Property Tax liability.  More details will be in the Finance Bill.

Tax Credit on Rental payments for a Principle Private Residence

A new tax credit on rent paid for the family home valued at €500 per year has been introduced. It will apply to taxpayers who are paying rent on their principal private residence.

It will come into effect from next year but provision will be made so that it can be claimed in respect of rent paid in 2022.  

Social Welfare Payments

A €12 increase in the main weekly payments is being applied for 2023

 **Means Tested Payments

Selected Weekly Increases  - applied to selected weekly payments listed above

There is an increase in the Qualified Child Payment of €2 per week —applies to all weekly payments.

For those in receipt of a weekly social welfare payment, a once-off double week "Cost of Living Support" payment will be made to all qualifying social protection recipients. This will be paid in October and will include pensioners, carers, people on disability payments and jobseekers.

In addition to the weekly Fuel Allowance a lump sum payment of €400 will be made before Christmas to all recipients of this payment.

The Christmas Bonus will be paid at 100% rate in early December 2022 to certain recipients of a long-term Social Welfare payment—this is essentially a double payment for that month.

A once-off payment of €500 in November will be made to those who qualify for Disability Allowance, Invalidity Pension and the Blind Pension.

Drug Payment Scheme - the amount that participants in this scheme have to contribute themselves was reduced to €80 in February 2022 and will remain at this rate for 2023.

Child Benefit rates have not changed and remain at €140/ month.  A double payment of this benefit is to be paid in November 2022

The 20% fare reduction on public transport has been extended until the end of 2023

More detail on the Social Welfare rates can be downloaded here (pdf) 

Other Measures 

Statutory Minimum Wage

The statutory minimum wage is to increase by 80 cents from its current rate of €10.50 per hour to €11.30 per hour from 1st January 2023.

Carbon Related Measures

Carbon Tax—the rate of Carbon Tax will increase by €7.50 from €41 per tonne to €48.50 per tonne from midnight on 12th October 2022.  This will be an effective increase of 2 cents per litre (VAT inclusive) on petrol and diesel.  The impact of the carbon tax increase on auto-fuels will be offset with a reduction in the National Oil Reserves Agency (NORA) levy from 2 cent per litre to 0 cent per litre .
Increases in Home heating oil and other fuels will not come into effect until 1st May 2023.

Vehicle Registration Tax - The €5,000 relief for Battery Electric vehicles was extended to the end of 2023 in Budget 2022

Temporary Business Energy Support Scheme (TBESS)

This scheme which has to get EU State Aid approval before it commences will provide up to €10,000 per business per month until Spring 2023 to help meet rising energy costs.  Qualifying businesses, whose average unit gas or electricity price has risen by over 50% compared to their average unit price in 2021, can apply to Revenue for a cash payment, which will be calculated as 40% of the excess of the 2022 bill over the 2021 bill, capped at €10,000 per month per business.   Farming businesses will also be eligible for this scheme.

Miscellaneous

• Cigarettes—Exercise duty on a pack of 20 cigarettes will rise by 50 cent, with a pro-rata increase on other tobacco products.
• Inpatient Hospital Charges - are to be abolished
• Electricity Credits—a total of €600 will be paid to each household in three instalments with the first instalment paid before Christmas and the other two in 2023
• Student Contribution - for eligible students there will be a once off reduction of €1,000 in the
  Student contribution for the 2022/ 2023 academic year
• Free School Book Scheme—will be introduced in Autumn 2023 for the 2023 / 2024 school year.
• Help to Buy Scheme - has been extended until the end of 2024.
• Energy Upgrade Schemes—€337 million has been allocated for energy upgrade schemes (Warmer Home Scheme, National Home Energy Upgrade Scheme, Better Energy Homes, Community Energy Grant Scheme and the Solar PV Scheme)

Schedule for Finance Act 2022

The measures outlined in the budget will be published in the Finance Bill 2022.  It will be debated by both houses of the Oireachtas and will be signed into law as Finance Act 2022 in mid to late 
December.

Finance Bill stages

• Finance Bill published - 21 October 2022
• Committee Stage - 16 - 18 November 2022
• Report Stage - 30 November - 1 December 2022
• Seanad Report Stage - 15 December 2022
• President signs Finance Act 2022 - on/ before 25 December 2022

Note:

This summary is based on the author’s interpretation of the relevant Budget and Finance Bill measures and should not be taken as a definitive interpretation of these measures. For all individual tax queries you are advised to seek professional tax advice from your own accountant/ tax adviser.

References

Department of Finance Budget Section 

Revenue Budget Information (pdf)

Department of Social Protection 

Department of Agriculture, Food & the Marine  

Important Note

This summary is based on the author’s interpretation of the relevant Budget and Finance Bill measures and should not be taken as a definitive interpretation of these measures. For all individual tax queries you are advised to seek professional tax advice from your own accountant/ tax adviser.