Preparing for 2024: A guide for Irish SMEs

As 2024 approaches, Irish SMEs face a changing fiscal landscape. The Budget 2024, announced on October 10, 2023, introduces significant adjustments in taxation and incentives, vital for SMEs to understand and adapt to.

This guide summarise the key changes in the areas of corporation tax, capital gains tax, VAT, capital acquisition tax, investment incentives, R&D tax credits, capital allowances and more all desinged to get you ready for 2024.

These changes are essential for businesses to understand and adapt for 2024.

Corporation Tax Changes

SMEs will now navigate a new landscape with the introduction of a minimum effective tax rate of 15%. This applies to businesses with global annual turnover exceeding €750 million in at least two of the previous four years.

Capital Gains Tax Updates

The Angel Investor Relief under CGT now supports third-party individuals investing in innovative startups. This relief allows a reduced CGT rate of 16% or 18% for partnerships, applicable on gains up to twice the value of the initial investment, capped at a lifetime limit of €3 million.

Value Added Tax (VAT) Modifications

Budget 2024 extends the reduced VAT rate of 9% for gas and electricity supplies until October 31, 2024. Additionally, the VAT rate on electronic books, audio books, and solar panel installations on school buildings is reduced to 0% starting January 1, 2024.

Capital Acquisition Tax (CAT) Adjustments

Changes to CAT now include extended benefits for gifts and inheritances within wider familial relationships, including those from foster parents, allowing claims under the Group B CAT threshold.

Investment Incentives

Updates in the Employment Investment Incentive (EII), Start-up Relief for Entrepreneurs (SURE), and Start-up Capital Incentive (SCI) include revised eligibility criteria, a standard minimum holding period of four years, and an increased maximum investment limit from €250,000 to €500,000 annually.

Capital Allowances

The budget extends accelerated allowances for Energy Efficient Equipment until December 31, 2025, and for Farm Safety Equipment until December 31, 2026, fostering investments in sustainable and safe business practices.

R&D Tax Credit Enhancements

Enhancements include an increase in the R&D tax credit rate from 25% to 30% and an increase in the amount of credit payable in Year One from €25,000 to €50,000, encouraging more research and development activities.

Film Tax Relief (FIL Tax) Updates

The FIL Tax sees an increase in the maximum expenditure eligible for the credit, now set at €125 million, providing a significant boost to the film industry.

Irish SMEs are encouraged to adapt to these changes, leveraging new opportunities for growth and sustainability in 2024 and beyond.

Get in touch

If you would like to discuss any aspect of R&D Tax Credits or the Tax Cloud portal, feel free to contact our friendly expert team on 020 7360 4437 or send us a message.

Author Barrie Dowsett, ACMA, GCMA CEO, Tax Cloud