PAYE Compliance Interventions

Revenue will carry out a range of targeted PAYE compliance interventions with a focus on share schemes and increased debt management activity. The Department of Finance considers that such projects will increase taxpayer compliance and yield additional revenue of circa €80m for the Exchequer. 

Standard Rate Band

The 20% standard rate band has been increased by €3,200 for all earners. The following rate bands will apply for 2023:  

Tax Credits

The Personal Tax Credit, Employee Tax Credit and the Earned Income Credit have all been increased by €75 from €1,700 to €1,775.

The Home Carer Tax Credit has also been increased by €100 from €1,600 to €1,700. 

Rent Tax Credit

A new Rent Tax Credit is to be introduced. This annual tax credit of €500 will be available to renters in the private rental market who do not avail of any other State housing supports. One credit may be claimed per person per year, and it is proposed that the value of the credit is doubled for married couples and civil partners. 

The Rent Tax Credit may be claimed 'in year' from 2023 to 2025. The Rent Tax Credit will also be available for the year 2022 (to be claimed from early 2023).  

Intermediate Rate of Income Tax

The Minister announced that the recommendation of the Income Tax Strategy Group to introduce a third and intermediate rate of income tax will be considered and a detailed analysis of the practical implications of introducing a third band will commence immediately and conclude prior to the 2023 Summer Economic Statement. 

The proposal is to introduce a new intermediate income tax band between the current standard rate of income tax (20%) and the higher rate of income tax (40%). The introduction of a new intermediate rate of tax between the standard rate of income tax and the higher rate of income tax would benefit middle and high-income earners. 

The Minister speculated that the third band could be implemented from January 2024.

Universal Social Charge (USC)

The ceiling for the 2% rate of USC will be increased by €1,625 from €21,295 to €22,920. This increase is proposed in light of the 80 cent per hour increase to the national minimum wage as announced by Government in September 2022 which will come into effect from 1 January 2023.

The reduced rate of USC for all medical card holders earning less than €60,000 is maintained for a further year until 31 December 2023. The reduced rates of USC are 0.5% on the first €12,012 and 2% on the balance.

Pre-letting expenses for landlords

A tax deduction was introduced in 2017 to allow landlords to deduct certain expenses incurred before a property is let out. The purpose of the deduction is to encourage landlords in the residential rental sector to return empty properties to the market as quickly as possible.

The cap on the maximum tax deduction available to landlords for pre-letting expenses will double to €10,000, and the required period of vacancy for properties to qualify will reduce from 12 months to 6 months.

Special Assignee Relief Programme (SARP) 

SARP is being extended for a further three years until 31 December 2025. The minimum basic salary needed to qualify for SARP is increased from €75,000 to €100,000 per annum. Individuals who are currently availing of SARP are not affected by this change. 

Foreign Earnings Deduction (FED)

FED is being extended for a further three years until 31 December 2025. FED provides relief from income tax on up to €35,000 of income for employees who are tax resident in Ireland and who travel outside of Ireland to temporarily carry out employment duties in certain qualifying countries (e.g.  Brazil, Colombia, South Africa).

For further information on Budget 2023, please contact Brian Duffy or your usual William Fry Tax contact.