Sunday 19 November 2017

Self-employed and farmers to get €150 tax credit in Budget

Finance Minister Michael Noonan
Finance Minister Michael Noonan

Fionnan Sheahan, Niall O'Connor and Philip Ryan

Finance Minister Michael Noonan will give a tax credit to the self-employed and farmers worth up to €150 in the Budget.

A range of income tax reliefs for young farmers will also be extended for another year.

The point at which low and middle income workers start paying the top rate of tax will also be raised.

The Coalition is also looking at tax relief worth €20m-€30m for hauliers to stimulate the export sector.

Mr Noonan is committing to bridging the gap in tax treatment between PAYE and self-employed workers.

At the moment, PAYE workers get a tax credit worth €500, which does not extend to the self-employed.

The minister will bring in a self-employed tax credit and has told farm groups they will also benefit from any changes in this area.

Mr Noonan is currently working out the detail but the credit is expected to be worth up to €150 next year.

The self-employed tax credit would rise gradually over the next three to four years, he said.

Tánaiste Joan Burton signalled the Coalition will lift the threshold for the top rate of tax.

Ms Burton says the Government must make further changes to the level at which workers start paying the higher rate of tax.

At the moment, workers pay the higher rate of 41pc on earnings above €33,800.

The move will take tens of thousands of low-to-middle income earners out of the higher rate net.

Ms Burton said she wants the Budget to deliver tax cuts for people earning €25,000 to €70,000, adding that the Labour Party is committed to phasing out the USC over a number of budgets.

But on possible increases in the old-age pension, Ms Burton warned that the Government has a "limited envelope" and cannot introduce all the changes it wants to in one go.

Ms Burton confirmed in this newspaper yesterday that the Christmas bonus for pensioners and social welfare recipients will be worth €115 this year.

Agriculture Minister Simon Coveney will continue a number of income tax reliefs for farmers which were due to run out at the end of the year:

25pc general stock relief;

100pc stock relief for certain young trained farmers;

50pc stock relief for registered farm partnerships.

And the 100pc stamp duty exemption for young trained farmers will also be retained.

Mr Noonan is being urged to bring in more welfare benefits for the self-employed.

A Fine Gael internal committee has recommended that the self-employed should get social welfare benefits immediately if they become unemployed, similar to PAYE workers. The businesspeople then wouldn't have to go through a means-test.

The group also wants to see an extension of sickness benefits to the self-employed.

A Fine Gael group on small business set up by Mr Noonan recently presented him with a set of recommendations for the SME sector.

Research carried out by the group - which is made up of Cork East TD Tom Barry, Cork North-West TD Aine Collins, and Wexford TD Liam Twomey - found more than 50pc of business owners are willing to pay additional PRSI to avail of more social welfare benefits.

In the report, seen by the Irish Independent, the group recommends that the Government "examine the provision of additional social protection measures to the self-employed", including jobseekers' allowance and sickness benefits.

Self-employed workers are entitled to maternity benefits and a State pension but must be means-tested to avail of jobseekers' and disability allowances, unlike PAYE workers.

However, a Government source said it was unlikely there would be a change on the social welfare side in the Budget.

The document describes the discrepancy between the tax paid by the self-employed and PAYE workers as an "historical anachronism". The group also called for increased lending by banks to small businesses.

And it recommended a State-backed equity fund to focus exclusively on the SME sector.

Irish Independent

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