BY JOHN ELLIS, FINANCIAL ADVISOR
According to Minister Pascal O’Donohue this year’s Budget focused on helping families and businesses facing the cost-of-living crisis arising from the Russian invasion of Ukraine and the continuing effects of the Covid-19 pandemic.
He said “As one of the most open economies in the world, we benefit when things are going well internationally, but when they reverse, we are also one of the most exposed.”
According to Aviva’s economist Jim Power, other areas of concern are a very tight labour market, a serious problem in the provision of childcare and the ongoing escalation in the cost of housing for both renters and owner-occupiers.
Budget 2023 contained two distinct elements – a package of once-off measures to alleviate the cost-of living pressures and the normal increase in the various elements of expenditure and taxation which carry forward to future years.
Courtesy of Aviva here are some of the key elements.
A payment of €600 to offset rising electricity bills is set to be paid to every household. It will be paid in instalments, with one before Christmas and the other two in the new year.
Double child benefit payment in November and a once-off double week “Cost of Living Support” payment to social welfare recipients in October – this includes pensioners, carers, people on disability payments and jobseekers. An additional €500 for those receiving the Working Family will be in November with an additional €500 for Carer’s Support Grant recipients to be paid in November.
Once-off payment before Christmas of €200 to recipients of the Living Alone Allowance with a once-off payment of €500 to those who qualify for Disability Allowance, Invalidity Pension and the Blind Pension being paid in November. The normal Christmas Bonus will be paid in early December for social welfare recipients with a €12 a week increase for every recipient of a social protection payment. Working Family Payment thresholds rise by €40 a week with Qualified Child Increase for under 12s up to €42 a week and for over 12s to €50 a week.
Qualifying income threshold for the Fuel Allowance will increase (from January 1 next) from €120 to €200 above the relevant rate of the State Pension Contributory. For over 70s, the weekly Fuel Allowance means limit will be extended to €500 for single people, €1,000 for couples. Domiciliary Care Allowance rate rises by €20.50 to €330 a month and will be available to parents of babies who have to remain in hospital for six months. Top-up payment to participants on the Community Employment, TÚS and Rural Social Scheme rises by €5 to €25 a week.
On the income tax side an increase of €3,200 in the income tax standard rate cut-off point for all earners, from €36,800 to €40,000 for single individuals and from €45,800 to €49,000 for married couples / civil partners with one earner. With an increase of €75 in the Personal Tax Credit from €1,700 to €1,775 and an increase of €75 in the Employee Tax Credit from €1,700 to €1,775.
An increase of €75 in the Earned Income Credit from €1,700 to €1,775. An increase of €100 in the Home Carer Tax Credit from €1,600 to €1,700.
Help-to-Buy scheme will continue, at current rates until the end of 2024. Taxpayers paying rent on their principal private residence will receive a new rent tax credit valued at €500 per year from 2023 and may also be claimed in respect of rent paid in 2022.
The amount landlords can claim in pre-letting expenses per premises is being doubled to €10,000 and reducing the period for which a premises must be vacant from twelve to six months. A new Vacant Homes Tax is being introduced for residential properties which are occupied for less than 30 days in a 12-month period. A 10% levy is being introduced on poured concrete and concrete blocks from April 2023 and is expected to raise €80m annually. It has been introduced to raise funds to address issues with mica.
Childcare funding will be provided to support a reduction of up to 25% in the weekly fee for those using the National Childcare Scheme – this should result in up to €175 a month savings for parents in 2023.
Small businesses can avail of a temporary Business Energy Support Scheme, once eligibility criteria are met, 40% of an organisation’s energy increases will be covered, subject to a monthly cap of €10,000 a month per business.