Budget Box – 8 key benefits for SMEs

Budget 2016 was well flagged before it was published. There’s a lot of ‘devil in the detail’ but what are the main benefits it brought to SME owners? 

  1. Your employees have benefited so where there are no pay increases at least their disposable income will have increased which may put less pressure on wage demands.
  2. Those of you paying minimum wage will have to increase the rate by 50 cents to €9.15 per hour.
  3. The lower 8.5% Class A rate of employer PRSI will apply to weekly earnings up to €376. This threshold will increase from the current €356. This provision will benefit 26,000 employers.
  4. Vouchers of €500 per year can now be provided tax-free to employees.
  5. The transport sector especially will benefit from reduced commercial motor taxes with the maximum rate payable €900 per annum as opposed to the current rate of €5,195.
  6. The Minister has listened to the comments regarding the inequality of no credit similar to the PAYE credit for business owners and introduced a €550 credit with the expectation that the full credit of €1,650 will be introduced in the next two budgets.
  7. A 20% rate of tax as opposed to the current 33% will apply to disposals of certain business assets to a lifetime limit of €1m. 
  8. The penal additional 3% USC for self-employed earnings over €100,000 has not been removed.

Remember there are attractive reliefs for passing on businesses to the next generation. Overall, the budget is positive and a step in the right direction. However, personal income tax rates are still too high.

This article was written by John Fisher, director, Business Tax Services, Smith & Williamson