Your guide to wringing the most out of Budget ’24
Here’s how to accentuate the positive and eliminate (or at least minimise) the negative
Are you a winner or a loser from this week’s Budget? And what should you do to maximise your gains – or minimise your losses? Here’s our quick guide to what you might have missed:
WINNERS Variable-rate and tracker mortgage holders
Tracker mortgages have not been sold since 2008, so anyone with one of these is in the enviable position of being at least 15 years into their mortgage, presumably with much less to pay off. They have also paid hardly any interest for a decade as rates fell below zero (the mortgage rate is set to be barely above official rates).
There was some pain as interest rates rose 10 times in just over a year to 4.5%. Now tracker and variable rate borrowers – and a few fixed-rate borrowers to a limited extent (see losers column) – can claim up to €1,250 in tax relief on any increase in interest paid this year compared to last year. Here’s how it works:
Mortgage Interest Tax Relief will apply for one year only (2023) and is capped at €1,250. To qualify, you must have had an outstanding mortgage balance of €80,000-€500,000 on your primary home on December 31, 2022. This relief will apply at 20% to the increase in mortgage payments in 2023 compared with the amount you paid in 2022.
EXAMPLE:
Interest paid 2022: €5,000 Interest paid 2023: €9,000 Total increase: €4,000 €4,000 @ 20% = €800
To claim, file a return with Revenue after the end of the year. The relief will be in the form of a credit. This will be offset against your income tax liability in 2023. This week’s Finance Bill will have more details.
Renters – and landlords
The rent tax credit has been upped by €250 to €750 – or €1,500 for married couples for 2024.
So if you’re a single individual and pay to rent your property, you’re now entitled to a tax credit worth €750. And ‘if you pay for a student child living in “digs” accommodation, you can avail of the Rent Tax Credit for them’, advises taxback.com
What do you need to do? Many people have not claimed this credit (first introduced in Budget 2023) yet, which means they can backdate it to include this year’s rent.
If on PAYE, you can claim for your 2023 credit online through ‘MyAccount’ by clicking the ‘Manage Your Tax 2023’ option in PAYE Services.
If you’re a self-assessed taxpayer, you can claim after the end of the year through Revenue Online Services (ROS).
Landlords tax relief
A controversial landlords tax relief is also due next year. The relief will be available against some rental income at the standard rate of 20% each year from 2024 to 2027. Landlords can claim up to:
• €600 for 2024
• €800 for 2025
• €1,000 for 2026 and 2027
The relief only applies if the landlord keeps their property in the rental market for the next four years. Otherwise it will be clawed back.
One-off payments
There’s a tendency to announce one-off payments (see panel, right) in the budget. These make sense as they don’t commit governments to overspending for years to come.
But these payments can also disguise real cuts in core welfare and tax benefits if these are not raised in line with inflation (and they aren’t this year).
LOSERS Carbon tax
We heard little about carbon tax in the Budget. But unlike many other budget measures this one is already starting to hurt, applying to petrol from yesterday. Carbon tax will
increase the cost of petrol and diesel by around 3c a litre, adding another €25-€30 to our car fuel costs. The increase will apply to all other fuels from May 1, 2024, adding nearly 20c to the cost of a bale of briquettes and 75c to a bag of coal.
Taxpayers – especially widows, blind people and the aged
Finance Minister McGrath claimed to reduce taxes by €1.3bn in the Budget. In reality, by ignoring the impact of inflation, he actually increased the tax we will pay in real terms by around a billion euro, according to the Revenue Commissioners.
Eight tax credits did rise in line with inflation and will maintain their value but many others did not. Incredibly, the ones that did not were those for the blind, widowed parents and the aged.
Why the Government singled out these people for worse treatment is anyone’s guess – as is how they managed to get away with it.
None of these credits were increased, so they are worth €100 less to these people next year.
Fixed-rate borrowers
People who were sensible enough to fix their mortgage will get nothing from the mortgage interest relief package – unless they fixed during 2023 at a higher rate. And even then, there will be slim pickings. They may even have fixed at a higher rate in advance of interest rate rises and have ended up paying over the odds in order to spare themselves pain later. If so, they will be entitled to feel miffed at the bonanza bestowed on tracker borrowers.
Foster carers
The Government’s treatment of foster carers is the worst example of short-sighted petty meanness in Budget 2024.
Foster carers look after children who don’t have anywhere else to go apart from institutional care. And they get precious little for performing this vital and demanding role. After no increase for foster carers in 14 years, they were finally promised something in the budget – a €75 a week increase.
That’s little enough to someone for not only performing a childcaring role but also racking up expenses. But in an act of breathtaking pettiness, the State decided to withhold most of the increase until the end of next year. They will get €25 in January and €50 in November 2024.
This is incredibly short-sighted as it costs €6,000 to mind these children through institutional care, which is a far cry from the loving homes many of these foster parents provide. Many are now leaving the system, disgusted by the lack of support, RTÉ’s Liveline radio show highlighted during the week.
Also mentioned was a rumour foster carers would receive a silver teapot on retirement instead of proper financial respect. It was treated with the derision it deserves. ‘I don’t feel one bit appreciated,’ one foster mother told presenter Katie Hannon.
There’s not a lot foster parents can do apart from continuing to raise their issues – which are strong enough to elicit a response from Government before the Finance Bill is finalised this week.