Now that the 2017 budget has been released, Damien Martin looks at the items that will impact on your business.
Budget 2017 is the first budget that has been unveiled since the UK voted to leave the EU. Minister Noonan started off with claiming that Ireland has “
overcome huge challenges’’ and these were challenges that many people believed were too overwhelming for the country to overcome. The budget of €1.3 billion reflects expenditure increases over revenue reductions by over three to one. Peninsula (Ireland) Limited has created a short synopsis of the key impacts of Budget 2017 and how it can affect your business:
Summary of Key Issues for Employers
- Increase in minimum wage from €9.15 to €9.25 from January 2017.
- Lowering of USC rates (see below).
- Social Welfare benefits increasing by €5 per week
- State pension to rise by €5 per week from March.
Income tax
- The three lower USC bands are to reduce by 0.5% –
- the 1% rate which applies to first €12,012 earned will be reduced to 0.5%
- the 3% rate which applies on earnings between €12,013 to €18,772 will reduce to 2.5%;
- the 5.5% rate on earnings of €18,773 to €70,044) will reduce to 5%.
- Aside from the USC, PRSI and income tax rates remain unchanged.
- There will be an increase of €400 on the Earned Income Tax Credit bringing it up to €950 and this increase will benefit over 147,000 self-employed individuals who are generating business activity across the country.
- The Foreign Earnings Deduction relief will now apply where an individual spends 30 qualifying days abroad.
- The DIRT rate will decrease by 2% and will continue to do each year for the next four years with an aim of a 33% rate by 2020
Taxes and Initiatives for Businesses.
- The Start Your Own Business scheme will be extended for a further two years, up to 31 December 2018.
- The rate of capital gains tax on qualifying asset disposals has been reduced from 20 per cent to 10 per cent, up to a limit of €1 million in chargeable gains.
- There is to be no change to the 12.5% rate of corporation tax.
- The flat-rate addition for farmers not registered for VAT is being increased from 5.2 per cent to 5.4 per cent with effect from 1 January 2017.
- A 9% VAT rate for tourism and hospitality industry will be retained.
Social Protection
- Weekly social welfare benefits will increase by €5 per week. This will affect employers who top up such payments, such as maternity leave.
- Help-to-buy scheme to assist first-time buyers. It will give a rebate of income tax of 5 per cent of purchase of a new house up to a value of €400,000. That is worth €20,000 for a household which buys a house at the maximum value.
- Mortgage Interest Relief will be extended beyond December 2017 to 2020.
- Home Carers’ Credit to be increased by €100 to €1,100
- €25 cap on prescription charges for over 70s reduced to €20 from 1 March.
- Home renovation scheme extended for two years to end of 2018.
- Unemployed people aged under 25 will receive an additional €2.70 in their weekly payments.
- The Christmas bonus for weekly social welfare recipients will be increased from 75 per cent of the weekly payment last year to 85 per cent this Christmas, equating to €159.80.
Pensions
Childcare
- Medical card for all children who receive domiciliary care allowance.
- New Single Affordable Childcare Scheme from September 2017 - means-tested subsidies, based on parental income, for children between six months and 15 years and universal subsidies for all children aged six months to three years.
Job Creation
- Budget to recruit up to 800 new Gardaí, with more civilian staff to be hired in order to free up desk-bound officers.
- 2,400 additional teaching posts announced, of which 900 will be resource teachers.
- 1,000 additional nurses and midwives to be recruited.
If as an employer you are unsure how this change to illness benefit will impact your business, please do not hesitate to contact Peninsula on 0818 923 923 and one of our experienced advisors will be happy to assist.
