PAYE Settlement Agreement for 2024
It is getting close to that time of year when employers need to consider whether they are required to make an application to Revenue in relation to a PAYE Settlement Agreement (PSA) for 2024.
The new tax credit is a one-year tax credit for the 2023 tax year only and is based on the increase in interest paid in 2023 over interest paid in 2022. The relief is aimed at offsetting some of the impact of 10 successive interest rate increases from the European Central Bank (ECB), which has made many homeowners dig deeper into their pockets to service their loans.
Even though several conditions need to be satisfied to avail of the relief, it is estimated that approximately 208,000 homeowners are eligible to benefit from the tax credit and have extra money back in their pockets. Homeowners who have fixed-rate mortgages or mortgages with balances of less than €80,000 as of 31 December 2022 will, however, not benefit from the relief.
If you did take a qualifying loan, which means a loan from a qualifying lender (lender listed by the Central Bank of Ireland) which was used solely for the purchase, repair or development of a residential property that is used as your sole or primary residence, then you will be entitled to claim the MITC for the 2023 tax year where all these conditions were satisfied:
The credit is available for the 2023 tax year only and is based on the increase in interest paid in 2023 over interest paid in 2022. The increase will, subject to a cap of €6,250, qualify for relief at the standard rate of Income Tax (20%), meaning the maximum value of the MITC is €1,250 per qualifying property.
For example, if you have a qualifying loan with a mortgage balance of €200,000 on 31 December 2022 and you paid €12,000 in interest on the qualifying loan in 2023 and €9,000 in interest on the qualifying loan in 2022, then you qualify for MITC as calculated below provided all the other above conditions are satisfied.
Interest paid by you 2023 | €12,000 |
Interest paid by you 2022 | €9,000 |
Increase in the Interest Paid | €3,000 |
MITC at 20% | €600 |
The relief will be calculated on a pro-rata basis if the interest paid in either or both years was for less than 12 months or where there are multiple claimants in respect of the same property.
One must file an income tax return for the 2023 tax year in order to claim MITC, regardless of any other obligation to file a return. Revenue requires you to submit the following supporting documents:
If you have any questions in relation to the above, or if you would like to discuss this topic further, please contact a member of the Mazars private client team below:
Staff Member | Position | Telephone | |
Alan Murray | Tax Partner | amurray@mazars.ie | 01 449 6480 |
Siobhán O’Moore | Tax Director | somoore@mazars.ie | 01 449 6418 |
March 2024
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