As an adviser to SME’s and being an SME ourselves, the team in Doyle Murtagh & Co watched the budget in great detail. Despite all the leaks in advance, the Budget speech is really the one to watch ahead of the actual Finance Bill.

Budget 2016Budget 2016 has received a broadly positive response from SME’s. The retention of the 9% VAT rate in the hospitality sector is very welcome. We work with many clients in this sector and the reduced VAT rate has been an important lifeline for them through the recession.

SME’s and business owners in general have also benefited in terms of the earned income credit, reductions in commercial motor tax and CGT Entrepreneur Relief. Getting into the detail, some of the top things to watch for as you do your own planning for 2016 are:

1. Income Tax & PRSI

• A new Earned Income Tax Credit of €550 is being introduced in 2016 for self-employed and business owners/managers who are ineligible for a PAYE credit on their income.
• A lower rate of 8.5% Employer PRSI is to apply to weekly earnings of up to €376.01 (up from €356.01).

2. Corporation Tax

• The Corporation Tax relief on trading income (and certain capital gains) in the first 3 years of trading for new start-up companies was due to expire at the end of 2015 but is being extended to companies commencing a qualifying trade over the next 3 years.
• The Start-Up Relief for Entrepreneurs (SURE) has been extended by including investments in the extension, management and operation of nursing homes.
• Knowledge Development Box (KDB) – A company which has engaged in Research & Development (R&D) in Ireland and which now earns profits from patents or copyrighted software resulting from that R&D, can avail of tax relief under the KDB. The profits associated with the Irish R&D will be taxable at an effective rate of 6.25%.

3. VAT

• There are no changes to VAT rates or thresholds.

4. Capital Gains Tax (CGT)

• CGT Entrepreneur Relief – Capital Gains on disposals of business assets made on or after 1 January 2016 will be charged at a reduced rate of 20% up to an overall limit of €1m.

5. Other

• Motor tax on commercial vehicles – The rate of Motor Tax is being reduced for all vehicles above 4,000kgs, with a new annual rate of €500 for vehicles between 4,000kgs and 12,000kgs and €900 for vehicles over 12,000kgs.
• Agri Food Sector – General Stock Relief, Stock Relief for Young Trained Farmers and Stock Relief for Registered Farm Partnerships are being extended until 31 December 2018. It is planned to introduce a new farm transfer partnership mechanism to promote family farm succession.
• The national minimum wage will increase from €8.65 per hour to €9.15 per hour with effect from 1 January 2016.
Business is obviously built on consumer confidence and consumer spending so it is also hoped that the USC reductions will put extra money in people’s pockets and this will help restore consumer confidence and encourage spending which will have a positive impact on SME’s going forward.

Further Information
Doyle Murtagh & Co are expert advisers to business owners and managers and provide full support on all matters relating to audit, tax and business advisory. If you require any further information contact Doyle Murtagh & Co on 01 2837001 or office@doylemurtagh.ie.