In every budget there are winners and losers. Budget 2017 is no different although it has been described variously as “neutral”, “prudent”, and “cautious”. What are the highlights from the budget for businesses and business owners? Here are five things you should know.
Corporation Tax Rate
It is “as you were” with corporation tax as the standard rate is unchanged at 12.5 percent. This is to provide certainty in the market. In addition, and following the ruling of the EU Competition Commissioner on Apple’s tax payments, the Government has also announced a review of the tax code to examine its robustness. The 12.5 percent rate, however, is not within the scope of the review, so it will not be changed as a result.
VAT Rate On Tourism Business
VAT on tourism related business was reduced in 2011 to 9 percent. Initially this was to end in 2014 but that was extended. The Government has now extended it again, keeping the 9 percent rate in Budget 2017. This has been welcomed by the tourism industry which employs 230,000 people across the country.
The initiative to allow businesses to claim capital allowances on energy efficient equipment has been extended. It is also now available to sole-traders and non-corporates – they were not able to take advantage of it previously.
Start Your Own Business incentive
The Start Your Own Business incentive scheme has been extended until 2018. It is a scheme aimed at the long term unemployed. It offers exemption from Income Tax for qualifying individuals who set up a qualifying business. The Income Tax exemption is up to €40,000 per year and can be claimed for a period of two years.
Capital Gains Tax
This is one of the areas that caused the most controversy as the standard rate of Capital Gains Tax remains at 33 percent. Many business organisations and others had been asking for a reduction in this rate. There was, however, good news for entrepreneurs as the Capital Gains Tax Relief for Entrepreneurs has been enhanced. It can be claimed by entrepreneurs on profits made when selling all or part of a business, up to €1 million. Previously the relief was 20 percent, but in Budget 2017 this has been reduced to 10 percent.
Other Points to Highlight
Some other announcements were made in Budget 2017 that apply to certain industries:
- Fishing – introduction of a new Income Tax credit of €1,270 for those who spend at least 80 days a year fishing for wild fish or shellfish
- Farming – an opt-out option has been added to the income averaging scheme, the farmers’ flat rate is being reduced to 5.2 percent from January, and restructuring relief has been extended until the end of 2019.
- Microbreweries – relief for microbreweries has been extended to those that produce up to 40,000 hectolitres per year. The relief halves the standard Alcohol Products Tax rate.
For further information on Budget 2017 and to get specific advice for your business, please contact a member of the Gilroy Gannon team today.