The new VAT cut on apartment sales, exit tax on investments, childcare and social welfare increases were foremost in readers’ minds as they sifted through the details of Budget 2026, with one of the measures threatening a double whammy against consumers.
Hundreds of queries poured into The Irish Times Budget Live Q&A, where we were joined by PwC Private Clients tax director Beryl Power and tax senior manager Jacinta Lynch.
Everything from the extension of the mortgage tax credit to whether foster carers could expect any increase in the financial support they receive featured. The most striking feature of reader interest, however, was the number of questions focusing on issues that were not in the budget speeches of ministers Paschal Donohoe and Jack Chambers.
Inheritance tax, as always, exercised people even though there was no change to existing provisions. And the “squeezed middle” came looking to see if there was any good news for them financially. Not really.
RM Block
The 4.5 percentage point cut in VAT on the sale of new apartments from 13.5 per cent to 9 per cent was naturally a focus for a number of readers who are currently in the process of closing deals for new apartments.
Will the benefit of the cut – amounting to tens of thousands of euro given current property prices – be passed on to consumers or used to pad the profits of developers?
Given that it was a cost developers were simply sending on to Revenue and of no use to themselves, the presumption in Government has been that it will be passed on to improve the affordability of apartments for ordinary buyers. But, as of now, there is no detail to confirm that must be the case.
Worse, as stamp duty is charged on the price of a property net of VAT, buyers face higher stamp duty bills if the VAT bill is reduced but the property price is not.
The Finance Bill, due next week, may provide more answers on this and other measures.
Elsewhere, investors cheered the decision to cut “exit tax” on investments from 41 per cent to 38 per cent but remain angry at a concept called “deemed disposal” which means Revenue taxes accrued investment profits every eight years even if you remain invested.
“Everyone wants it gone: retail [investors] want it, Department of Finance officials want it, the EU wants it, the funds industry wants it. What are they waiting for?” asked one particularly irate reader.
Increases in welfare payment is always a subject of interest and so it was again, with enhancements in the working family payment of particular interest – including access they will have to the fuel allowance, which jumped €5 to €38 a week, for the first quarter of next year.
The lack of fundamental reform of costs in the childcare sector continues to stress young families who will await Minister Norma Foley’s promise of details on a new cap for fees “in the coming months”.
Parents of college age students are more upbeat as they save €500 on college fees from the current academic year onward while families with income of up to €120,000 can now avail of some Susi third level financial support.
Of the biggest tax giveaway of all – the cut to VAT for food, catering and hairdressing businesses – there was not a word, perhaps a sign of fatalism among the wider public at the prospect of any benefit from that measure feeding through to consumers.
