What will the 2017 budget mean for you?

Daisy Downes, Business Writer, talks us through her predications for the Budget 2017…

Entrepreneurs and the self-employed look set to benefit from pro-business measures in Budget 2017 but high earners may lose out if the PAYE credit for those earning over €100,000 is removed.

The earned income tax credit introduced in Budget 2016 is expected to increase by €550 to €1,100 in Budget 2017 before reaching the Government’s target rate of €1,650 the following year. While this is good news, the impact will be modest as the self-employed still pay higher taxes than PAYE workers on the same gross income.

It’s likely that a scheme providing additional PRSI benefits for the self-employed will be announced on Budget Day. Depending on the cost and benefits, business owners may welcome a voluntary scheme. A mandatory scheme could be perceived as an additional tax on small businesses, however.

Published in May, A Programme for a Partnership Government (PfPG) promises to:

explore mechanisms through which SMEs can reward key employees with share options in a tax-efficient manner”.

Any progress on this objective in Budget 2017 could help SMEs with limited resources to attract and retain talent.

Start-ups stand to benefit from a reduced Capital Gains Tax rate of 10% (held for 5 years and subject to a €10m cap on gains.

An increase in the Capital Acquisitions Tax (Group A) threshold, which was raised to €280,000 in Budget 2016, is also expected.

Business owners will be hoping any increase in the national minimum wage will be mitigated by a cut in employers’ PRSI for low income workers as promised in the PfPG.

There have been calls for a reduction in the rate of VAT on new homes to assist first time buyers getting on the property ladder. There has also been some discussion around ending the 9% VAT rate on tourism services that was introduced in July 2011.

"It will be interesting to see if the Minister will make any VAT changes in these areas in Budget 2017.” - Owen Sheehy, Tax Partner with McInerney Saunders.

Minister Noonan is holding his cards close on details of the planned ‘Help to Buy’ scheme for first-time home buyers. If announced on Budget Day, this should be backdated to 19 July 2016.

The Government has said that the Universal Social Charge (USC) will be reduced on a “fair basis with an emphasis on low and middle-income earners”. This suggests that those earning up to €70,000 are most likely to benefit. There is still uncertainty as to what Minister Noonan will do about the USC for higher earners.

In recent days the Minister has suggested that the marginal rate of tax is too high and that this is discouraging people from coming to or returning to Ireland.

This would suggest that there is a possibility that the top USC rate will also come down … However, there is still considerable uncertainty in relation to this and it’s quite possible that the higher marginal rates will continue post Budget 2017.” - Peter Vale, Tax Partner with Grant Thornton.

Barring unforeseen developments, Budget 2017 will be announced on 11 October 2016 with the Finance Bill expected no later than two weeks thereafter.