Inheritance tax and welfare issues were the top priority with Irish Times readers in our live post-Budget 2025 question and answer session on Wednesday.
A record 300-plus readers got in touch seeking clarity on a wide range of issues, which myself and PwC director of private client services, Beryl Power.
Changes to the inheritance tax regime were uppermost in people’s minds, confirming the Government’s judgment in addressing the issue for the first time in five years.
Many wanted to know when the new higher tax free thresholds would come into force. Others who are working their way through the affairs of relatives who have died over recent months and even years wanted to know if they would benefit.
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After a Dáil vote late on budget day, the new thresholds are in force from Wednesday, October 2nd. A child can now receive up to €400,000 in large gifts (over €3,000 in any one year) and inheritances from a parent before they have to think about tax. The limit falls to just €40,000 when you receive the benefit from a brother, sister, aunt, uncle, grandparent or great-grandparent, and to €20,000 from anyone else, including parents-in-law and cousins.
And, in line with practice, the new thresholds will not be backdated. That means if your relative died before October 2nd, you will be working under the old thresholds when assessing tax liability. That means €335,000, €32,500 or €16,250 depending which of the categories above any benefit falls into.
On welfare, readers were keen to confirm exactly how much their particular payment would rise by, and when. For most that will be January.
There was also keen interest in the timings of the lump sum and “bonus” double weekly payments for long-term welfare beneficiaries.
Many of the lump sum payments will come in November – especially those for pensioners – and the additional bonus weekly payment will arrive in October. However, the precise dates are still unknown. They will likely be announced by Minister for Social Protection Heather Humphreys in the coming weeks.
Expectant parents were focused on the child benefit packages with some discomfited to discover they will miss out on the double payment of child benefit in November and December if they baby is born in December. They will also fall short of the newborn baby grant – essentially a triple child benefit payments – because it applies only to children from the start of 2025.
Minister for Public Expenditure and Reform Paschal Donohoe may come to regret the wording of his speech where he assured parents that a “further 44 per cent” increase in funding for the National Childcare Scheme “will mean that, next year, parents will see full-time childcare costs reduce even further by an additional €1,100”.
Not so, his officials clarified. The Minister was effectively looking for a second bite at last year’s announcement of an increase in the subsidy, with this money funding that previous commitment which did lead to a fall in childcare costs last September.
In fact, there was nothing in the budget to reduce childcare costs.
Other areas that grabbed interest included the 6 per cent “mansion tax” stamp duty rate on property purchases in excess of €1.5 million and whether the small benefit exemption that will allow employers give staff up to €1,500 tax free will apply this year or only in 2025. It hasn’t been stated specifically but budget background documents suggest it will not take effect until the new year.
An interesting feature of readers’ queries was how many were concerned about what was not in the budget as against what was. This included the failure to increase income tax exemption limits for pensioners, means test limits for medical cards, no increase in the €3,000 small gift exemption and the absence of any new “green” incentives such as any widening of the Bike 2 Work scheme or additional grants for electric vehicles or home retrofits – although VAT on the installation of heat pumps was cut from 23 per cent to 9 per cent.
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