13 Oct Budget 2025: Highlights for Self-Employed Individuals

Budget 2025 (announced October 1st 2024) contains a range of benefits for self-employed individuals. Many of these changes come into effect from January 2025, while some come into effect in winter 2024. We take a look at the highlights in terms of changes to tax bands, credits and cost of living measures, to see what it means for you in the coming year.

Taxation & Credits

Taxation of Income:

• €125 Increase in the Main Tax Credits (personal tax credit, employee tax credit, and earned income tax credit) to €2,000 each
• €2,000 Increase in the Standard Rate Cut-off Point, raising it from to €44,000
• 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.

These combined changes mean tax savings of €250, €409, €359 for people on salaries of €20,000, €40,000 and €60,000 respectively.

Tax Credits:

• €150 Increase in the Home Carer Tax Credit from €1,800 to €1,950.
• €150 Increase in the Single Person Child Carer Credit to €1,900
• €300 Increase in the Incapacitated Child Tax Credit to €3,800.
• €60 increase in the Dependent Relative Tax Credit from €245 to €305.
• €300 Increase in the Blind person Credit to from €1,650 €1,950
• Sea-going Naval Personnel Tax credit extension

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.

Exemptions:

Exemption from Income Tax, Capital Gains Tax, and Capital Acquisitions Tax on payments to women impacted by CervicalCheck failures.

Business & Employment

Employment:

• Employment: 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
• 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”.

VAT:

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

Housing & Homes

Owners & Buyers:

• 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.

Renters:

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

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%

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. 

Transport

Public Transport:

• Continuation of 20% reduction in public transport fares
• 50% price reduction on Young Adult Leap Card (ages 19-25) continues
• Free public transport extended to children aged 5-8

Benefit in Kind:

• Extension of Benefit-in-Kind relief for electric vehicles
• Exemption from Benefit-in-Kind for the provision of EV chargers at home.

Carbon Tax:

• Carbon tax increase from €56 to €63.50 per tonne for petrol and diesel

Additional Supports

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.

Health:

• IVF and Hormone Replacement Therapy to be free of charge.

Supporting You & Your Business

Helpful Resources:

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

• Statement by Minister Chambers on Budget 2025
• Your Guide to Budget 2025
• Budget 2025: Cost of Living Measures and Supports
• Budget 2025 Calculator

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.

Make Tax Work Better For You

Our expert accountants can maximise all the benefits that apply to you and your business. All it takes is a phone call or email to get started. We handle everything, meaning you have more time to focus on what you do best without the stress of tax calculations and paperwork.