While other commentators in this supplement will have given a broader scope of the budget changes, this article will focus specifically on how the budget may help those people who work for themselves in a self-employed or limited company capacity.
While the devil is in the detail and we won’t know the full impact of changes for a few days, it was hoped Budget 2019 would be used to improve the taxation environment for entrepreneurs and SMEs in the Irish economy and I feel it has done very little for these sectors of the community.
This is not a political commentary, but one from a business owner who was hoping for a bigger impact both personally and for my clients.
The measures announced have been very limited. The major announcement for business was a future growth loan scheme for SMEs and the agriculture and food sector, providing up to €300m.
Finally, an extension of the three-year tax relief for certain start-up companies until the end of 2021 was announced.
However, one of the areas of interest to me, on which nothing was announced, was the job creation scheme — the Employment and Investment Incentive (EII) Scheme. This gives a tax break to individuals who help start-ups to raise capital. I know, first-hand, as someone who has investment in one of these companies, that this needs to be improved.
The continued delays by Revenue will make investors more reluctant to invest money in Irish companies due to the uncertainty of getting tax relief they were promised. More resources are needed for Revenue to process applications faster. In addition to more resources, the application process needs to be streamlined.
Also, the Key Employee Engagement Programme (KEEP) a relatively new tax-advantaged share scheme for SMEs, while welcome, is too restrictive and I felt could have been improved. There are restrictions in terms of the type of companies that can qualify, as well as restrictions around the proportions of share options to salary. The restriction of share options to 50% of the value of salary is unduly restrictive as a lot of salaries in small businesses may be quite modest.
I’d really like to see the 50% increased considerably to let the scheme fly for SMEs.
The capital gains tax entrepreneur relief, I feel, is also too restrictive.