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?
- 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.
- Those of you paying minimum wage will have to increase the rate by 50 cents to €9.15 per hour.
- 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.
- Vouchers of €500 per year can now be provided tax-free to employees.
- 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.
- 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.
- 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.
- 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.