Finance Bill 2024

Finance Bill 2024

Further to our recent Budget Highlights, we have briefly outlined below some additional points included in the subsequent Finance Bill.

Pensions Changes

Employer PRSA contributions – Take action now

Changes announced in the Finance Bill, include a limit on the amount of Employer contributions to PRSAs and PEPPs. This change will limit the Employer PRSA contribution to 100% of an employee’s salary – in any one year. Any Employer amounts contributed in excess of this limit will :

• be treated as a taxable Benefits in Kind (BIK) and
• the company will not be entitled to a Corporation Tax adjustment in relation to the “excess contributions”.

This may give rise to a considerable reduction in the amount of Employer Pension contributions. Therefore it is imperative that any planned Employer PRSA contributions are made as soon as possible, as the above changes may come into effect shortly this year.

Increases in the Standard Fund Threshold (SFT)

The SFT is due to increase from €2,000,000 to €2,800,000 in intervals from 2026 to 2029. This is a welcome increase given the historic trend of reductions applied to the SFT. Therefore a review of your existing pension fund value should be undertaken.

Capital Taxes

Retirement relief - Capital Gains Tax (CGT)

Retirement Relief is a very valuable relief and it can provide for a CGT exemption for a parent, on a transfer of business assets to family members. It is proposed that from 1^st January 2025:

• if the parent is aged between 55 and 69 at the time of the transfer and
• the value of the business assets are valued in excess of €10m at the time of the transfer
• a 12-year clawback period will apply on subsequent disposals by the children where Retirement Relief was claimed. The child would have to retain the assets for 12 years to ensure Retirement Relief is not clawed back.

This is a substantial extension of the existing clawback period which is 6 years.

Increase in Capital Acquisitions Tax (CAT) Thresholds 

The various Group thresholds are increasing as follows

The above increases are effective from 2 October 2024.

Employment

Small Gift Exemption

• This allows employers to provide vouchers and non-cash benefits to employees.  
• The annual Small Benefit Exemption will increase to €1,500.
• The number of allowable gifts has increased from two to five

This is to come into effect from 1 January 2025

Installation of Electric Vehicle Chargers

• BIK will not apply where an employer pays for the installation of an e-charging facilities at the home of an employee or a director.
• The employer must also provide an electric vehicle to the employee and retain ownership of the charging facility, in order for this to apply.
• This treatment will apply from 1 January 2025.

Foreign Dividends - Corporation Tax

From 1 January 2025 the participation exemption will apply to foreign dividends received by Irish companies. It will exempt dividends and other distributions received from ‘relevant territory’ resident companies. A ‘relevant territory’ includes EEA and Tax Treaty territories.

If you have any queries on the above, please do not hesitate to contact the Azets Tax team.