We’re calling this year’s budget the “Brexit Budget” because in many ways it’s the only thing on the agenda. There was very little else in the 2020 Budget, with only minimal changes to the carbon tax and the overall climate change agenda. It seems to be that until the UK Parliament decides which way they’re going to bounce, Ireland is stuck in Brexit-proofing mode.
By and large, our tax situation remains unchanged. Tax receipts have grown, so the economy is in good shape. The overall tax yield has been positive from the corporations.
There is a small increase of €150 for earned income credit due in January. This corresponds with the five-year plan to bring earned income credit more in line with PAYE.
There was a small change to PRSI tax, which was at 10.95% and is now 11.05%. It’s not a change we like to see, because it is expensive to hire people and personal taxes, which can be up to 56%, are already far too high.
Capital Gains Tax remains high at 33%.
The focus is predominately on cutting back and putting finances into the Rainy Day Fund. Herein lies the controversy.
As expected, Brexit funding is being made available to support businesses if there is a hard Brexit. The focus is predominately on cutting back and putting finances into the Rainy Day Fund. Herein lies the controversy. The promise that had been made for €500 million to be transferred into the fund from the Exchequer has been withdrawn. However, the Minister for Finance and Public Expenditure, Paschal Donohoe TD, says that €1.5 billion from the Ireland Strategic Investment Fund will be transferred into the fund.
The Budget has left us in anticipation for improvements to the KEEP (Key Employee Engagement Programme) scheme. The scheme is designed to give tax relief to employees who use share options. However, there was little detail as to what these improvements might look like in reality.
Climate change agenda
It was disappointing to see that the Budget chose a very meek change to the carbon tax. They could have made a bolder move here, especially after making such a song and dance about their plans beforehand. Even with the marches organised by Extinction Rebellion outside the Dáil on the day of the budget, there was still just a €6 per tonne increase in carbon tax which is at the lower end of the proposals.
There is now a nitrogen oxide charge that will apply to new and imported petrol and diesel cars. Although the exact charge is not known yet, it is presumed to look something like €5 per mg/km NOx.
All in all, not the most exciting Budget for Irish businesses! It’s disappointing that there still has been no improvement to Entrepreneur’s Relief. It’s a great incentive, but it could be a lot better. Right now, the lifetime relief is limited at €1 million. We would rather see a higher figure here, especially since in the UK the Entrepreneur Relief’s lifetime limit extends to €10 million. We’ll be keeping an eye out for the Finance Act in the coming weeks which will give us more detail on the above changes.