Budget 2018 is set to have a number of benefits for almost everybody, with a number of tax cuts and the introduction/increase of other taxes. But how does this affect SMEs? What exactly does it mean for small businesses, or businesses in general? While most of the budget focused on the likes of welfare and household goods, there are some key takeaways.
Altogether, Minister for Finance Paschal Donohoe announced €1.2 billion in spending and tax cuts, with the majority of this being in favour of spending. Some will be pleased to know that Ireland’s 12.5pc Corporation Tax has remained the same. This is set to keep Ireland competitive in regards to foreign investment.
Here’s how else it’s going to affect SMEs the most.
Self-Employed Tax Credit
Some good news for the self-employed. Mr. Donohoe has announced that the self-employed income tax credit will be increased by €200. As a result, the new tax credit stands at €1,150 from next year onwards. While not as much as some would have hoped, it is an improvement.
Brexit Loan Scheme
While this mightn’t affect many businesses, it is a helping hand for those who have trade partners in the United Kingdom.
The Brexit Loan Scheme will help those most at risk of being affected by the U.K leaving the E.U, which should go miles in easing some fears.
It has also been announced that the Department are looking into a longer-term loan solution.
However, it seems that the scheme will be available to most companies involved in importing and exporting.
Minister for Business, Enterprise and Innovation Frances Fitzgerald said of the scheme:
“Businesses are telling me that access to working capital is a key issue for them and my Department’s research confirms this. The Brexit Loan Scheme will reduce the cost of borrowing and provide much needed headroom to viable businesses at this uncertain time.”
Capital Gains Tax
On a sour note for SMEs, Capital Gains Tax has remained unaltered at 33pc. So far, this hasn’t gone down well with the likes of ISME, with comparisons of Ireland’s CGT being compared to England’s. As ISME told the Independent.ie:
“An opportunity was missed to address the disparity between the UK and Ireland in CGT Entrepreneur’s relief. The UK enjoys a ceiling of £15m, compared to our €1m. The CGT rate remains unaltered at 33pc.”
Minimum Wage Increase
Definitely good news for those earning minimum wage. For SMEs, it depends on how you take it. As it stands, the minimum wage is set to increase by 30c to €9.55 per hour. Possibly not great news for SMEs already struggling financially, but with everything else announced in Budget 2018, it’s a small price to pay.
Altogether, Budget 2018 wasn’t great for most Irish SMEs. However, with some of the changes introduced, it mightn’t have been the worst either.