In Budget 2023, a new tax credit was announced for those taxpayers who are paying rent in respect of a residential property and who do not get any other housing support, such as the Housing Assistance Payment. While some details of the credit were known at the time of its announcement, the full scope of the relief is included in Finance Bill 2022, which was released on 20 October.
Rental payments in respect of an individual’s principal private residence, a residence to facilitate work or college, or a residence of a qualifying child attending college will, subject to satisfying the required conditions, qualify for relief. Where rent is paid on behalf of a qualifying child, neither the child nor the individual can be a relative of the landlord, the child must be using the property to facilitate him/her to undertake an approved course, and the tenancy must be registered with the Residential Tenancies Board.
The value of the tax credit is equal to the lesser of 20 per cent of the qualifying rental payment made and €500, or €1,000 in the case of a jointly assessed couple. Thus, a maximum credit of €500 per claimant will apply or €1,000 in the case of a jointly assessed couple.
This credit will apply in relation to the 2022 to 2025 years of assessment, inclusive.
It may be necessary for the claimant to provide Revenue with full particulars of the tenancy under which the qualifying rental payment was made in order to avail of the rental credit.
The Bill confirms the increase in the standard rate income tax band to €40,000 for single individuals and €49,000 for married couples/ civil partners (one earner) for 2023 onwards.
Other increases to tax credits which were announced on Budget Day such as the Personal Tax Credit, Employee Tax Credit and Earned Income Tax Credit, all of which have been increased to €1,775, were also confirmed in the Bill.
Additionally, the Home Carer Credit will be increased by €100 to €1,700 from 2023 onwards. Where the Home Carer Tax Credit applies, the income threshold to determine the level of the credit will be increased proportionately depending on how the individual is paid (i.e. weekly, fortnightly etc).
The Bill confirms an increase in the ceiling of the 2% USC rate from €21,295 to €22,920 from 1 January 2023. This will ensure it remains the highest rate of USC paid by full-time minimum wage workers when the National Minimum Wage increases on 1 January 2023 to €11.30.
With regard to full medical card holders under 70 years of age, whose aggregate income does not exceed €60,000, the reduced USC rate of 2% USC which currently applies, will be extended to 31 December 2023.
The Bill confirms the Budget Day announcement to increase the annual limit for the Small Benefits Exemption from €500 to €1,000. Employers are now permitted to provide an employee with two vouchers in a single year, provided the cumulative value of the two vouchers does not exceed €1,000. This increase will apply for 2022 and subsequent years.
On Budget Day it was announced that the Help to Buy Scheme would be extended for two years to the end of 2024, providing relief at the current rates (i.e., the lesser of €30,000 or 10% of the purchase price of the new home or self-build property. This announcement is reflected in the Finance Bill.
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