Budget 2020 tax measures assessed by small business advocates

10th October 2019

The finance and small business community has been reacting to the tax measures announced for Budget 2020 that will affect start-ups and growing small businesses throughout Ireland.

Minister for Finance, Pascal Donohoe, confirmed a package of tax reliefs specifically targeting micro and small businesses.

The government has allocated €1 billion to the Department of Business, Enterprise and Innovation next year, allowing it to increase research and development (R&D) tax credits from 25% to 30% for small firms to foster innovation.

Mr Donohoe also announced changes to the Key Employee Engagement Programme (KEEP), enabling part-time employees to qualify for company share incentive schemes that keep staff engaged and motivated.

A spokesperson for the Irish SME Association (ISME) said that the changes announced to the KEEP scheme are “welcome”. However, it urged for people to “await the fine detail of the proposed changes in the Finance Bill to see if they make the scheme workable”. They added that KEEP had “failed to take off in the last two budgets”.

Tax incentives for investors buying into Irish start-ups have also been enhanced in Budget 2020. The government’s flagship Employment and Investment Incentive Scheme (EIIS) has seen its annual investment limits raised to €500,000 for next year, but only for funding from investors who are prepared to invest for a minimum of ten years or more. The annual investment limit for all other investors has been increased to €250,000.

Ireland’s self-employed community will have welcomed the decision to increase the level of earned income tax credit available to them by €150 to €1,500. However, this is still €200 short of parity with PAYE workers.

Reports prior to Budget 2020 suggested that capital gains tax could also be altered. However, Mr Donohoe confirmed that following a departmental review, no changes would be made at the current time.

“This was very much a steady-as-she-goes, incremental budget, with nominally small adjustments across a very small tax package,” added the ISME spokesperson.

If you’d like to digest a full summary of tax measures affecting your small business in Budget 2020, be sure to download our comprehensive overview here.

 

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