Brexit cast a long shadow over the announcement of Budget 2020. The government statements leading up to this year’s Budget advised that there would be no surprises and as predicted Brexit contingency planning runs through the fiscal measures for the coming year.
From the employer perspective, the following issues were notable.
Minimum wage increase deferred
The National Minimum Wage hourly rate of pay will increase by €0.30 to €10.10. The rate change will come into effect in March 2020 rather than January 2020 in the event of a no-deal Brexit.
Parent’s Benefit
The government published the Parent’s Leave and Benefit Bill 2019 before the Budget. €22 million has been set aside to cover the introduction of the new Parent’s Benefit which will come into effect from November 1st 2019. Once signed into law, both parents will be entitled to take 2 weeks’ paid parent’s leave in the first 12 months after the birth, or within the first 12 months after the date of adoption.
This benefit of €245 per week is available to employees in addition to existing maternity, paternity and adoptive leave benefits. This creates the potentially confusing scenario where a mother can take 26 weeks’ paid maternity leave, followed by 16 weeks’ unpaid additional maternity leave, followed by 2 weeks’ paid parent’s leave.
Brexit war chest
The government has ring fenced a €900 million war chest to cope with uncertainties caused by a no-deal Brexit.
€100 million has been set aside to help people at risk of losing their jobs and a further €10 million in loans will be available to small at-risk companies.
Small business supports
The Department of Business, Enterprise and Innovation will receive nearly €1 billion, including €10m for a disruptive technologies fund and €600m for a Brexit loan and growth scheme.
The Research and Development tax credit for small and micro companies will increase from 25% to 30%.
The KEEP employee share option scheme has been extended to allow part-time and flexible employees to participate.
Microbreweries and small independent bookmakers will also benefit. The qualifying production cap for microbreweries has been increased from 40,000 to 50,000 hectolitres, while small independent bookmakers will enjoy betting duty relief for up to €50,000 a year.
Benefit in Kind on electric vehicles
The Benefit in Kind zero rate on electric vehicles was extended to 2022.
National Training Fund Levy and Employers’ PRSI
As announced in last year’s budget, from January 1st 2020, there will be a 0.1% increase (from 0.9% to 1.0%) in the National Training Fund Levy. This levy is payable by employers in respect of reckonable earnings of certain employees.
The National Training Fund Levy is collected as part of employers’ PRSI. Employers’ PRSI will therefore rise from 10.95% to 11.05% from January 1st 2020 representing an additional cost for employers.
Carbon tax
There will be a €6 increase on the current rate of Carbon Tax applied per tonne of carbon dioxide emission. This brings the rate from €20 per tonne to €26. The increase will affect petrol and diesel prices from midnight on October 8th and all other fuels on May 1st 2020. Employers with large vehicle fleets will be impacted immediately.
No fundamental changes to taxation
Paschal Donohoe’s Budget announcement began by stating that this year’s budget focused on two overarching goals. One was to offset the impact of Brexit and the second was to improve public services.
The overall result is that no fundamental changes have been made to either income tax or VAT policy. The measures announced are largely concerned with protecting small businesses against the negative consequences of a disorderly Brexit and the growing concerns around climate change.
While the €6 increase in the carbon tax is less than the €15 per tonne increase recommended by the Climate Change Advisory Committee, the long-term target is for the price of carbon to increase to €80 a tonne by 2030.
The real significance of the Budget may be that it signals the need for all sectors of society to begin preparing for a carbon neutral future.
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