Budget 2017 for SMEs and employers
Earlier this week Government announced a budget package of €1.3 billion split between tax and expenditure. Minister Noonan said the budget package, "reflects the Government’s commitment to rebuilding and investing in public services, while " Minister for Public Expenditure Paschal Donohoe said the budget was based on three principles: "Spending that we are confident we can afford now and into the future; making progress to a fairer society; and protecting our economy, particularly on account of the uncertainty caused by Brexit."
Speaking about job creation, Minister for Jobs Mary Mitchell O'Connor said, "It is clear that our Agencies are playing a leading role in contributing to Government’s overall target of delivering an extra 200,000 jobs by 2020. So my aim is that 2017 sees delivery of a further 40,000 to 45,000 new jobs across the economy next year."
Here's a quick summary of some of the measures for small business and employees to be introduced as part of Budget 2017. See Department of Finance's website for the full range of Budget 2017 documents.
For entrepreneurs and small business...
- Successful entrepreneurs will now have a lower 10% rate for the Capital Entrepreneur Relief with a limit of €1 million. Minister Noonan has said he will review the €1 million lifetime limit in future budgets.
- €3 million will be spent on Government's Trading Online Voucher Scheme in 2017. The Scheme, run though the Local Enterprise Office network, offers grants up to €2,500 to businesses to develop their trading online capacity, along with training, mentoring and support.
- Start Your Own Business relief is being extended for a further 2 years until the end of 2018 to encourage additional new start-up businesses. This scheme provides a limited income tax exemption for individuals who are long term unemployed who set up their own business.
- Accelerated capital allowances for energy efficient equipment scheme currently available to companies, is being extended to all sole traders. The scheme helps small businesses to invest in energy efficient equipment which should provide ongoing savings to the business in terms of lower energy costs.
- Following on from a public consultation earlier this year, a new SME Share Option Scheme will be introduced in Budget 2018.
- The Foreign Earnings Deduction is being extended to 2020 and the number of qualifying days reduced to 30 days.
For the self-employed...
- Self-employed people will benefit from an earned income credit of €950, a €400 increase.
- Up to 380,000 self-employed people who pay PRSI at the S class will have new benefits extended to them, including treatment benefit such as free eye and dental tests for the first time, and access to the safety-net of State income supports if they have a serious illness or injury that prevents them from working without having to go through a means test.
- Increased take home pay for low and middle-income workers from further reductions in the Universal Social Charge rates; USC rates of 1%, 3% and 5.5% have been reduced by 0.5%.
- The ceiling on which the reduced 2.5% rate of USC will be payable has increased from €18,668 to €18,772, to ensure that the salary of a full-time worker on the minimum wage will remain outside the top rates of USC. The maximum marginal rate is now 49% for those earning below €70,044.
- The minimum wage has increased to €9.25, following on from recommendation of the Low Pay Commission
- Some dental benefits linked to PRSI have been re-introduced for all classes of PRSI payees, including employees.
Increase in funding for Enterprise Agencies to help Irish businesses
Government's Enterprise Agencies are currently delivering an extra 70 jobs per day and their supported companies are contributing well in excess of €40 billion to the economy annually. Budget 2017 provides additional funding to these Agencies, with Minister Mitchell O'Connor saying she wants this money to be used to continue that level of jobs progress next year.
- IDA will see its capital funding grow by 22% to €137m. Some of the additional monies will enable the IDA to progress 3 more new Advance Facilities in the regions, with new builds planned for Dundalk, Limerick & Galway next year.
- Enterprise Ireland is being provided with a total Exchequer capital allocation of €185 million. €63m of this (+ 12%) focusing on its general enterprise development and business supports and €122m (+3.7%) for its Research and Development supported activities.
- The Local Enterprise Offices’ (LEOs) will see their capital funding grow by 22% to €22.5m, recognising their potential to generate start-ups and job creation at local level.
For more information
Check out Merrion Street's full coverage of Budget 2017.
See Department of Finance's website for Budget 2017 documents.