Little tweaks rather than big leaps for small business owners this time around
Published 15/10/2016 | 02:30
For many - possibly most - business owners, the eventual sale of their company and business assets is their main pension plan, according to Eilis Quinlan, an accountant and director of Isme, which represents small business owners.
She welcomed the decision in Budget 2017 to slash the rate of capital gains tax paid on the disposal of assets of the whole or part of a trade or business, from 20pc to 10pc, which she said means business owners will get to keep more of their nest egg.
The rate was 33pc just two years ago, and has come down in large part to match the regime in Britain.
However, the new 10pc rate here is capped on disposals of €1m in a lifetime and they must have owned the business for at least three years before they can avail of the lower rate. In Britain the cap is €10m, and Michael Noonan said the cap here will be kept under review.
On the flip side, a rise in social welfare rates, combined with the recently announced increase in the minimum wage and public sector pay increases, is likely to put upward pressure on wages paid by small businesses.
A promise in 2015 to equalise the treatment of the self employed and other workers in the tax and social welfare systems didn't happen, though there was some incremental progress, Eilis Quinlan said.
"I'm disappointed in that some of the things promised last year didn't happen. Tax equalisation (between self employed and employees) was only partly done, the extra 3pc PRSI owners pay was not addressed," she said.
An increase of €400 in the earned income tax credit for the self-employed goes some way to level the playing field, as does the opening up of some dental and optical benefits to the self employed, she said.
The failure to fully deliver on the 2015 promise means there must be a doubt over this week's pledge to develop a new, SME-focused, share-based incentive scheme in time for next year's budget, Eilis Quinlan said.
Business owners, particularly those who compete for staff with multinationals, want such a scheme.
Currently staff awarded shares as part of their pay are taxed on the notional value of the award - even though they have no cash to show for it.
Taxing the shares only when they are realised would remove cash flow issues for employees, help business owners offer a long term reward for staff without dipping into cash flow.
A new affordable credit scheme for farmers, to be rolled out by the Strategic Banking Corporation of Ireland (SBCI), was included in the Budget. Farmers have been under severe pressure in recent years, but business groups are likely to push for access to the fund to be extended to other sectors.