Home Renovation Tax Incentive Scheme (HRI) – Budget 2014

Posted on October 17, 2013 by Oliver Dempsey

Home Renovation Tax Incentive Scheme HRIMinister for Finance, Michael Noonan, presented the Irish budget for 2014 on Tuesday, October 15th. Amongst the items announced in the budget was the introduction of the new Home Renovation Tax Incentive Scheme. The idea of the Home Renovation Initiative is to motivate domestic renovations and also increase the requirement for construction jobs.

The Incentive will offer tax relief by way of a tax credit at 13.5% of qualifying expenditure to home owners undertaking repair, renovation or improvement work on their primary residence within the next two years. The work must commence on or after 1st January 2014 and be carried out during 2014 or 2015.

This tax credit will be calculated at on spending from €5,000 up to a maximum of €30,000 (exclusive of VAT). The minimum tax credit is €675 (based on qualifying expenditure of €5,000 (excluding VAT) x 13.5%) and the maximum is €4,050 (based on qualifying expenditure of €30,000 (excluding VAT) x 13.5%).

The credit will be payable over the two years following the year in which the work is carried out. The tax credit is non refundable so any unused tax credit will roll forward to the next year.

Work that will qualify for the tax relief will include house extensions, house renovations, plumbing, tiling, plastering and window fitting. Items such as furniture, white goods and carpets will not be covered.

Home owners must be LPT (Local Property Tax) compliant in order to qualify under the Scheme. The minister has stated that the move will support fully tax compliant builders as the spending and relief will have to be registered with the Revenue Commissioners. The Scheme will be administered through Revenue’s online systems.

The proposed introduction of the Home Renovation Tax Incentive Scheme has been warmly welcomed by construction groups as the scheme will address ongoing concerns about black economy operators and create jobs for qualified tradesmen.

The Society of Chartered Surveyors Ireland (SCSI) has said that the incentive will encourage people to use registered builders and discourage black market construction which is damaging standards in the sector.

Pat Barry of the Irish Green Building Council also said that the initiative will hinder “tax dodging cowboys” in the shadow economy but strongly insisted that more targeted measures to boost environmentally friendly construction will still be required:

“However the tax rebates above a certain level, must be targeted at measurable improvement in energy performance of the house, rather than just boosting construction for its own sake.”

Construction Industry Federation director general Tom Parlon said:

“The foundations for the recovery of our industry has been set in this Budget and this will help bring extra confidence, extra activity and most importantly, more construction jobs to our sector.

The Hardware Association Ireland (HAI) has welcomed the scheme.  In a press release they stated that,

“HAI believes that the proposed tax incentive scheme will help to create employment at a local level all over the country through bringing much needed spend to local hardware retailers as well as builders, plumbers, electricians and sub-contractors. “

“This stimulus also has the major advantage of bringing construction activity out of the shadow economy, with huge benefits for the formal economy, given that the European Commission has estimated that between 16% and 17% of all construction and household repair work is undeclared. “

All in all, it looks like this will be a great boost to families wishing to expand and improve their homes. It will also generate employment at a local level all over the country for people in the construction sector.

I hope you found this article interesting. If you have any comments on this subject please feel free to enter them in the comments box below.

Cheers,
Oliver Dempsey
Tradesmen.ie
17th October 2013
Some other articles that you might be interested in are listed below:   

http://blog.tradesmen.ie/2013/04/tips-for-building-your-perfect-kitchen-extension/

http://blog.tradesmen.ie/2013/03/garage-conversions-things-to-remember-when-planning-to-convert-your-garage/

http://blog.tradesmen.ie/2013/03/house-extensions-12-tips-on-extending-your-home/

http://blog.tradesmen.ie/2013/01/construction-contracts-why-are-they-needed/

http://blog.tradesmen.ie/2013/09/how-to-get-quotes-from-tradesmen/

http://blog.tradesmen.ie/2013/08/cash-jobs-warning/

http://blog.tradesmen.ie/2013/09/building-materials-who-should-buy-them-customer-or-tradesman/

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About Oliver Dempsey

Owner and Managing Director at Tradesmen.ie and contributor to the Tradesmen.ie Blog DISCLAIMER: All content provided in my articles is for informational purposes only. The information contained in these articles has been obtained from research carried out by myself through online and offline sources and through other writers and contributors who provide me with content. While I am responsible for the final editing of each article and I do my best to verify the information, I do not make representations as to the accuracy or completeness of any information. Therefore you must not rely on the information contained in any of these articles and always make sure to seek the advice of a suitably qualified expert before embarking on any project.
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  • Jorge Hoppe

    Can you avail of both: the renovation incentive and the insulation grant in the same home improvement project?

  • tradesmen1

    Hi Jorge, my guess is that you can but you can get further clarification on this matter at:-
    Better Energy Homes scheme
    The Sustainable Energy Authority of Ireland
    P.O. Box 119
    Cahirciveen
    Co. Kerry
    1850 927000

    I also checked Revenue.ie and their website says that, “Further information in relation to the Scheme, including operational aspects of the Scheme will issue shortly. More details will be available following publication of Finance (No. 2) Bill 2013 on 24 October 2013.”

    You can Lo Call Revenue at any of the numbers on http://www.revenue.ie/en/contact/lo-call.html

    Oliver

  • TippSparky

    Hi oliver,
    Great article. However I have to say that the best thing the government can do is stop listening to the likes of Tom Parlon and co who all seem to be living on another planet. As an experienced self-employed electrician and a person who comes from a family business in construction I can say that this scheme is not going to be as big a success as people think for a number of reasons.

    1: These schemes usually require the householder been able to pay the contractor before been able to claim which in turn requires them been able to access the funds to do so and as most small tradesmen and builders will testify the biggest reason people arent doing non-essential work on their home is the lack of finance available. As long as that remains the case people are going to continue doing as much as they can by googling how to an dreading diy books or getting friends of friends to do it for cash in hand.

    2: Its been my experience that most irish people when they get a quote look straight at the price and compare quotes primarily on that alone so when it comes to getting the work done they are going to weigh up the benefits against having to borrow the extra money to get a registered and fully tax compliant builder.

    3: There is this delusion that all tradesmen and builders who are not tax compliant are dodgy when in fact the recession has highlighted the opposite often tends to be the truth. Most of those who are tax compliant tend to be “subby busters” or pay their tax bill ahead of anything else. For example my late father was a small builder with 35 years experience. In that 35 years he never had to advertise as ALL his work was by referral yet he in that 35 years was in possesion of a tax clearance cert. All his suppliers, employees, pension fund, insurance, PRSI, VAT was paid on time it was usually his income tax return that was late and usually as a result of waiting for payment. Now if he was alive he wouldnt be able to do work for people who wanted to avail of this scheme however I gaurantee he would probably still have gotten a large quantity of it due to his reputation and his price.

    Now dont get me wrong any incentive to help boost the industry and the amount of work available is welcome however the insistance on tax compliance above any other criteria will be its downfall especially in the current economic situation

  • tradesmen1

    Hi TippSparky,
    thanks for your comments and you have made some very interesting points there. In relation to the tax clearance, many tradesmen have said to me before that good workmanship, qualifications and insurance should be a higher priority than tax clearance certificates so maybe that is something that the construction and tradesmen lobby groups should put to the government in the future. One would think that a tradesman who has paid insurance and perhaps membership to a certifying body would be more likely to be tax compliant so if these criteria were mandatory it would probably cover the tax compliance as well.

    Oliver

  • Andrew Jackson

    Hi Oliver Dempsey,
    Thank you for sharing it with all. This is very important thing to consider at the time of renovating any home.
    Home Renovation

  • Jane

    Hi Oliver, yes I think the Governments new initiative is a good idea to promote tradesmen who are tax compliant and assist those who wish to extend or upgrade their properties. However people like me, who are retired and only have a state pension, and would dearly like to extend our home are excluded from this initiative as we don’t pay any tax. It seems rather unfair as we have saved for two years for the extension and are using a builder from Tradesmen.ie who is tax compliant and have applied for planniing permission ect, and we would dearly like to avail of the help that this initiative provides, but we are excluded. I wonder how many other folk on low incomes like us who don’t pay tax, are excluded from this ?

  • tradesmen1

    Hi Jane,
    thanks for your comments and I am sorry to hear that you have been left out of this initiative encourage customers to hire tax compliant builders. I will forward your comments to a few of the politicians and while I can’t guarantee that they will listen to me, hopefully it will highlight the issue and get some debate started about it at least.

    Regards
    Oliver, Tradesmen.ie

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    Jane

    Hi Oliver, yes I think the Governments new initiative is a good idea to promote tradesmen who are tax compliant and assist those who wish to extend or upgrade their properties. However people like me, who are retired and only have a state pension, and would dearly like to extend our home are excluded from this initiative as we don’t pay any tax. It seems rather unfair as we have saved for two years for the extension and are using a builder from Tradesmen.ie who is tax compliant and have applied for planniing permission ect, and we would dearly like to avail of the help that this initiative provides, but we are excluded. I wonder how many other folk on low incomes like us who don’t pa y tax, are excluded from this ?

    4:36 a.m., Sunday Sept. 14

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  • tradesmen1

    Hi Jane,
    I wrote to the Government about this issue and they replied as follows:- “the Minister has no plans to extend this initiative to individuals who have no
    tax liability. However, the tax credit is being provided over a period of two
    years in order to assist those with low incomes. In addition, unused credits may
    be carried forward to future years. If a retired homeowner has a private pension
    which is liable to tax, then they will be able to avail of the
    incentive.
    It is worth noting that the SEAI
    operates the Better Energy Homes Scheme where cash grants are provided for
    qualifying works. The SEAI also install energy efficiency measures at no cost to
    qualifying individuals under the Warmer Homes Scheme. Further information on
    these schemes is available on the SEAI website”

    If you would like a full copy of the reply please contact me at http://www.tradesmen.ie/contactform.asp and I will send you a copy.

    Regards
    Oliver, Tradesmen.ie