Budget 2024 Q&A: Your mortgage interest relief, tax, pension, education and social welfare questions answered

• Published date: 11 October 2023
• Author: Dominic Coyle
• Publication title: Irish Times: Web Edition Articles (Dublin, Ireland)

Key reads

Income Taxes

Q. I have a €165,000 mortgage left. I pay €1,200 month. Will my monthly payments change?

From Jason

A. A fairly tightly tailored mortgage interest tax relief scheme was announced by Michael McGrath in the budget. It will not mean any change to your monthly payments but it may allow you to claim relief at the end of the year. How much you pay monthly is not relevant.

What counts is how much interest you are paying on your mortgage over the course of this year (2023) compared to 2022. So if you were on a fixed rate covering both years, there will have been no change in your interest bill and you will not qualify. If, however, you are on a tracker or other variable rate, or if you were on a fixed rate that expired some time last year or this year, you will be eligible.

The relief is modest, however, as the first four ECB interest rate rises – accounting for a 2.5 percentage point rise – happened in 2022; 2023 has seen rates rise by two percentage points in six separate steps. Those 2022 rises will of course fall into what will be the base year for referencing, limiting the benefit.

To claim the relief, you will have to file a tax return which means, in effect, that you will only see the benefit of the relief early next year. You must also be compliant with the local property tax to qualify. Essentially you will get 20 per cent of whatever the increase is this year over last year, up to a maximum benefit of €1,250.

The relief is available only to those whose outstanding mortgage balance at the end of last year was between €80,000 and €500,000, so you will fall within that. This has been presented as a one-off measure, so what happens your interest bill next year is also irrelevant. The Minister has promised more details in the Finance Bill. – DC

Students going to university

Q. What's in the budget for students going to university?

From Tony

A. There was a reduction in the student contribution fee for third-level students in yesterday's Budget. All students will receive a once off reduction of at least €1,000 in their fees. The reduction goes up to €1,500 for students living in households with an income of less than €100,000.

This will bring the student contribution fee down to €2,000 or €1,500 for the 2024/25 academic year. In addition, the Rent Tax Credit, which is being increased from €500 to €750 a year from 2024, will be extended to parents who pay for rented accommodation for their student children under the Rent-a-Room scheme and for 'digs'. – MH

Social Welfare

Q. How will the budget affect my State pension?

From Brendan

A. There were a number of supports announced for pensioners in this year's budget. There will be a €12 increase in the maximum weekly rate of all state pensions from January 2024 along with a proportionate increase for people getting a reduced rate.

In addition, a €300 cost of living lump sum Fuel Allowance payment will be made in November 2023 for those getting the Fuel Allowance and a €200 cost of living lump sum payment to people who are getting a Living Alone benefit.

A Christmas Bonus is to be paid in December 2023 and there is also a January cost of living bonus for pensioners to be paid in 2024. – MH

Motors

Q. As a cyclist, will there be any tax breaks for buying new bicycles?

From Francis

A. There was nothing announced in the budget to specifically encourage the purchase of bicycles on environmental or other grounds, such as we got previously with the Cycle to Work scheme back in 2009. – DC

Inheritance Taxes

Q. Has there been any change in the Capital Gains Tax or Inheritance Tax exemption limits?

From John

A. As anticipated there were no changes to the headline rate of Capital Gains Tax or Capital Acquisitions Tax and both remain at 33 per cent.

There were also no changes to the tax-free thresholds for gift and inheritance tax purposes despite calls to increase them in line with inflation. – MH

What's in the budget for someone in their mid-20s?

Q. What will the budget mean for me, a man in his mid twenties who has to live at home with his parents because the Dublin rental sector is too expensive. I am on €35,000 a year and work hard – yet it seems like we are being forgotten about.

From John

A. Based on your circumstances as described, you should end up with an extra €308 in your back pocket as a result of the changes announced on Tuesday.

Many individuals are being priced out of the rental market and although there were a number of housing measures announced, including an increase in the rent tax credit announced in Budget 2023 from €500 to €750, the scale of the housing crisis is such that these measures are unlikely to make a meaningful difference to individuals in your circumstance.

For a more accurate calculation of the tax savings accruing based on your individual circumstances please see: https://www.pwc.ie/issues/budget/income-tax-calculator.html. – MH

Fostering Allowance

Q. Is the fostering allowance going up in the budget?

From Kathleen

A. There were a number of measures announced in relation to fostering in a budget that spent a lot of time stressing its focus on children.

First up, an extra double payment of the weekly fostering care allowance of €325 per child under the age of 12 and €352 for older children will be paid this winter. I believe it will be paid in December.

More importantly, Minister Donohoe announced an increase in the statutory foster care rate "by the end of 2024". The rate will rise by €75 per week for children under 12 and €73 per week for children over 12. That will bring the weekly rates to €400 for a younger child and €425 for an older child in what is the first increase in this allowance since 2009.

Amended: Minister McGrath also announced his intention to change the rules on inheritance and gifts.

In line with a recommendation of the Commission on Taxation and Welfare, foster children will in future be able to benefit from the Group B threshold (tax free up to a lifetime threshold of €32,500 for people seen as close relations) on anything they receive from the wider family of a foster parent in the same way that a "biological" or adopted child of those foster parents can.

Previously, they were limited to the lower Group C (€16,250 lifetime tax free limit for people considered strangers) applying now.

It's not clear yet quite when that measure will be active in law. They are entitled to the Group A threshold (up to €335,000 tax free lifetime limit) on gifts and inheritances from their foster parents. – DC

Third-Level Fees

Q. Will there be help towards college registration fees this year?

From Colette

A. Minister Donohoe announced a reduction in the student contribution fee for third-level students in yesterday's budget.

All students will receive a once-off reduction of at least €1,000 in their fees.

The reduction goes up to €1,500 for students living in households with an income of less than €100,000. This will bring the student contribution fee down to €2,000 or €1,500 for the 2024/25 academic year. – MH

Updated information: Typically, reductions apply prospectively. However, the press release from the Department of Higher Education in this instance refers to "once off cost-of-living measures benefiting students in the 23/24 academic year". Subject to confirmation, the reductions should apply this year.

Inheritance Tax Thresholds

Q. Is there anything in the budget about inheritance tax thresholds? Either for a son or daughter or for a niece or nephew. It is a cruel double tax on a family on property that was hard earned in the first place. The thresholds for children are €335,000. And for nephews/nieces, €32,000. With the price of property so high I can't understand how more people are not shouting about this.

From Mary

A. Unfortunately, there were no changes to the Capital Acquisitions Tax (CAT) thresholds announced in this year's budget, either for children or other relatives and the thresholds remain at €335,000 and €32,500 respectively.

Given the rate of property price inflation in recent years, more and more people with modest levels of wealth are being pulled into the CAT net. We at PwC had sought increases in the CAT thresholds in our pre-budget submission. However, these changes did not come to pass. – MH

Income Taxes

Q. My partner and I are getting married in June of next year. What will be the effect on both our incomes (PAYE) if we opt to be jointly assessed in 2024?

From Stephen

A. The joint assessment option is usually the most favourable basis of assessment for a married couple or civil partners. Under this option, the tax credits and standard rate cut-off point can be allocated between spouses to suit their own circumstances.

If only one spouse or civil partner has taxable income, all tax credits and the standard rate cut-off point will be given to the spouse or civil partner with the income. If both of you have taxable income, you can decide which of you is to be the assessable spouse or nominated civil partner.

The standard rate cut-off point for married couples/civil partners is €49,000 in 2023 and this will increase to €51,000 in 2024. This amount is taxed at 20 per cent and the balance is taxed at 40 per cent. Where both spouses/civil partners have income, this standard rate cut-off point can be increased by the lower of the following: €33,000 in 2024; or the amount of the income of the spouse/civil partner with the smaller income. – MH

Susi Maintenance Grant

Q. Will the Susi maintenance grant increase and will they get a double payment like last December again? This was vital for my college-going daughter. Also will half price fares for students continue on buses, as I believe this is to end soon too?

From Marie

A. On the grant side, the ministers announced increases in the student grants from January.

The full effect will only be felt in the academic year starting next September but the payments will be made pro rata from January, so your daughter should see her payment rise for the second half of the...