Budget 2025 Highlights for Business Owners & Start Ups

Budget 2025 (announced October 1st 2024) outlines a range of benefits for businesses, entrepreneurs and workers along with some measures aimed at building resilience for the future. Many of these changes come into effect from January 2025, while some come into effect in winter 2024. Let’s take a look at the key changes and benefits.

Employment Measures

Workers will see more take home pay initially, as a result of changes to personal credits, taxation, however the introduction of pension auto-enrolment later in 2025 will require some adjustments and planning for both employers and their workers.

€2,000 Increase in the Standard Rate Cut-off Point, raising it from to €44,000
€125 Increase in the Main Tax Credits (personal tax credit, employee tax credit, and earned income tax credit) to €2,000 each
Reduction in the 4% USC rate to 3%
Increase in the USC middle threshold by €1,622 meaning that it will apply to income between €27,382 and €70,044.
National minimum wage increases by 80 cents to €13.50 per hour from January 2025
Increase in the small benefit exemption from €1,000 to €1,500, allowing up to 5 non-cash benefits per year

Pension Auto-enrolment

Pension auto-enrolment has been confirmed to start from the end of September 2025. This affects employees aged between 23 and 60 that earn over €20,000 per year and who do not already have a pension.

Employers and those affected employees, will be obliged to contribute 1.5% of the employee’s gross salary to their pension. Employers who don’t meet their auto-enrolment obligations, will be subject to penalties and possibly to prosecution.

However, there are no plans to force employers to contribute to personal pensions.

Measures for Businesses & Entrepreneurs

VAT

Increase in VAT registration thresholds to €42,500 and €85,000 in relation to the respective supplies of services and goods.

Increase in Spending on Upskilling for SMEs

More funds will be made available from the National Training Fund, aiming to increase funding for universities along with more direct support for upskilling. micro, small and medium enterprises to build business for the future.

Tax Exemption for Foreign-Sourced Dividends

Introduction of a tax participation exemption for foreign-sourced dividends, coming into effect from January 1st 2025. This will provide an alternative, much simplified mechanism for double tax relief for multinational businesses.

Capital Gain Tax (CGT)

In Budget 2024, a reduced Capital Gains Tax (CGT) of 16% was introduced for individual angel investors. In Budget 2025, the lifetime cap available to individuals will be increased from €3 million to €10 million.

Employment Investment Incentive (EII)

With regards to this tax relief, designed to encourage individuals to provide equity-based finance to businesses, the maximum tax relief available to an investor will be doubled from €500,000 to €1 million.

Start-Up Relief for Entrepreneurs (SURE)

Relief will be increased from €700,000 to €980,000 over 7 years.

Businesses Scaling Up

A new tax relief will be introduced for expenses of up to €1 million incurred over a 3 year period in relation to listing a company on a relevant stock exchange. There is also a proposed stamp duty exemption on a listing of Irish shares, subject to satisfying EU state aid considerations.

Research & Development (R&D)

This tax credit sees an increase in the first year payment threshold in the R&D tax credit, from €50,000 to €75,000, to provide further cash-flow support to those companies undertaking smaller R&D projects or engaging with the credit for the first time.

New Start-Up Companies

Enhancement of section 486C small company start-up relief from corporation tax means the introduction of a new method for companies to qualify for the relief by reference to Class S PRSI, thereby extending the scope of the relief to small owner-managed start-up companies.

Audio-Visual Sector

There will be a new tax credit, subject to EU approval, for unscripted production at a rate of 20% on qualifying expenditure of up to €15 million. There will also be a new 8% uplift under section 481 of the film tax credit to support smaller film production, with a maximum qualifying expenditure of €20 million.

Farmers

Various farming related tax reliefs, which were due to end, will be extended. These include enhanced stock relief for registered farm partnerships, stock relief for young trained farmers and general stock relief. Changes will also be made to agricultural stamp duty reliefs.

Retirement Relief

Retention of the upper age limit for the relief from 65 until the age of 70 to reflect current work practices.
An amendment is being introduced where there are disposals by the child or children above €10 million within 12 years of receiving assets, a clawback of the relief will apply. Therefore, “where the child or children retain the assets for more than 12 years, the CGT will be fully abated”.

Transport-Related Benefits and Changes

Extension of Benefit-in-Kind relief for electric vehicles
Exemption from Benefit-in-Kind for the provision of EV chargers at home.
Carbon tax increased from €56 to €63.50 per tonne for petrol and diesel from 9 October 2024 and for other fuels from May 2025.

Additional Supportive Measures

Inheritance Tax

Group A (parents to children): Threshold increased from €335,000 to €400,000. The tax value of this increase is approximately €21,500.
Group B (siblings): Threshold increased from €32,500 to €40,000.
Group C (other relatives): Threshold increased from €16,250 to €20,000.

Home Owners

The temporary mortgage interest tax credit of up to €1,250 (brought in for the 2023 tax year) will be extended due to the increased interest paid on mortgages between 2022-2024.
The Help-to-Buy-Scheme will be extended till the end of 2029.
Vacant Homes Tax: Raised to seven times the property’s base Local Property Tax rate.
Property Stamp Duty Changes: The existing rate of 1% will continue to apply to values up to €1 million, and 2% on values above €1 million, with a new third rate of 6% to apply to any value in excess of €1.5 million, with immediate effect.

Rent Credits

Increase in the Rent Tax Credit from €750 to €1,000 (€2,000 for jointly assessed couples).

Landlords

The deduction available to landlords in respect of certain pre-letting expenditure, has been extended out until the end of the year 2027 i.e., a three-year extension.

Home Energy

Energy Credit:€250 off electricity bills for all households, paid in two equal instalments, the first in December 2024 and the second within the first two months of 2025.
Extension of the 9% reduced VAT rate on gas and electricity until April 2025
VAT on Heat Pumps decreased to 9%

Support for Families

Double child benefit payments in November and December.
Double foster care allowance payments in winter 2024.
€400 lump sum for Working Family Payment recipient in winter 2024.
One-off €420 ‘baby boost’ payment for newborns starting 1 January 2025.

Helpful Rescources

We’ve provided you with the most relevant aspects of Budget 2025. You’ll find additional details from the following trusted sources:

In January 2024, ‘Enhanced Reporting Requirements’ came into effect. Revenue.ie provided a free webinar for employers and tax agents to provide an understanding of their responsibilities and obligations regarding this additional reporting requirement. A recording of this webinar can be found here.

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