Friday 20 October 2017

Key tax credit boost for those running their own business

Self-employed

Good news for the self-employed
Good news for the self-employed
Charlie Weston

Charlie Weston

THE self-employed were among the big winners in Budget 2018.

There was a €200 boost to a key tax credit for those who work for themselves, and they will also benefit from income tax and universal social charge (USC) changes.

If the self-employed person has one or more children and a spouse working in the home caring for them, the rise in the home carer tax credit will also boost the annual income.

But the self-employed will continue to pay an extra 3pc USC surcharge on income over €100,000.

Noted by organisations representing the self-employed is that the tax credit they get is still less than that for employees, who get €1,650. The self-employed will gain from a higher tax credit. What is called the 'earned income credit' goes up by €200 from January to €1,150.

Reductions in the 2.5pc USC rate to 2pc will apply to the self-employed also.

Up to the Budget, this rate applied on income between €12,012 and €18,772.

But the minister increased the ceiling for the 2.5pc rate from €18,772 to €19,372.

The 5pc USC rate will be reduced to 4.75pc.

This is the rate that applies on income between €19,372 and €70,044.

Operators of small and medium-sized businesses will gain from a new incentive called the Key Employee Engagement Programme (KEEP), designed to help firms recruit and retain key staff.

Staff will get options to buy shares in the operation.

When they come to sell the shares they will pay capital gains tax of 33pc, rather than income tax, pay related social insurance (PRSI) and USC when the shares are sold.

The scheme is expected to be welcomed by the self-employed as a way to get people to work for them and stay with the company.

Irish Independent

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