There certainly was a lot of detail in yesterday’s Budget. There were various SME-centred tax reliefs and supports which are welcomed. However, while the announcement of a 0.1% increase in PRSI next October 2024 will not come as a surprise, it will add to the costs of business owners along with other costs on the horizon. It felt that the Minister was trying hard to achieve something for everyone, yet it remains to be seen if the benefit of some measures will actually deliver, especially in driving Irish entrepreneurial spirit to its full potential.
A new capital gains tax relief for angel investment in innovative start-ups was announced. The relief will be available to an individual who invests in at least 5% of the ordinary share capital in an innovative start-up SME for a period of at least 3 years. Qualifying investors may avail of an effective reduced rate of CGT of 16%, or 18% if through a partnership, on a gain up to twice the value of their initial investment. There is a lifetime limit of €3 million on gains to which the reduced rate of CGT will apply. Further details will be set out in the Finance Bill and hopefully the applicable conditions will not limit the use and value of this welcomed relief.
The R&D tax credit rate will increase from 25% to 30% in respect of 2024 expenditure, for which claims will be filed in 2025. The first-year payment threshold will be doubled to allow for a claim up to €50,000 to be paid in full in that year.
From 1 January 2024, the existing VAT registration thresholds are being increased modestly to €40,000 for services and €80,000 for goods.
The Accelerated Capital Allowances scheme for Energy Efficient Equipment is being extended for a further two years to 31 December 2025. The temporary universal relief of €10,000 for calculating BIK on company cars will be extended to 31 December 2024. The existing BIK relief of €35,000 on Electric Vehicles will also be maintained up to 2025.
There are also enhancements to the Employment Investment Incentive and Key Employee Engagement Programme.
The age cap on Retirement Relief from capital gains tax on passing on the family business will be extended from 66 to 70 with effect from 1 January 2025. However, a limit of €10 million will then be imposed on the value that will qualify for the relief.
Entrepreneurs’ relief is set to be refocused so that the relief provides better incentives to company founders. It was hoped that we would see incentives to encourage entrepreneurs to remain committed to their businesses for the long haul, such an increasing the entrepreneur relief or extending it to provide access to fund. Unfortunately it appears not this time!
A €250 million package of temporary supports is being developed to support businesses through current challenges associated with Cost-of-Living pressures, including the increases to the minimum wage.
Details are yet to be published but indications are that a scheme will be established to provide once-off grants to up to 130,000 small and medium-sized firms. The payments will come in the form of tiered grants equivalent to up to 50% of the commercial rates paid by the firms this year. It's expected that payments will be made early in 2024.
For further commentary and insights please visit: https://kpmg.com/ie/en/home/insights/2023/10/budget-2024-tax.html
A range of measures was announced today recognising the impact rising costs have on businesses. This support, worth €250 million, includes:
There are also some changes for investors in SMEs which will be of interest:
There are also some significant changes to CGT rules which will impact on the transfer of family businesses.
For more information visit https://www.davy.ie/.