A revised CGT relief will come into effect from the beginning of next year which will see a 20% rate apply to the disposal of business assets up to a limit of €1m.
Chambers Ireland heralded it as a budget that finally delivered a tangible recognition that entrepreneurs and small businesses are the drivers of economic growth.
Business representative body, Ibec sounded a similarly optimistic note, describing yesterday’s set of measures as “the right budget at the right time”.
“The reduction to capital gains tax will make it more attractive to invest in new businesses and expand existing operations,” said Ibec chief executive Danny McCoy. “This, along with a new tax credit for the self-employed, will encourage more people to start their own businesses and create jobs.
“The budget will help support a more balanced mix of large and small companies, domestic and international, operating across the economy.”
Others were less effusive in their praise, however, saying much more should have been done to recognise the contribution of entrepreneurs to the economy.
Specifically, it was hoped that a reduction in CGT for entrepreneurs would see it fall in line with the UK’s 10% rate to curb the attractiveness of our neighbour to startups and small business owners.
“While there was much by way of positive news in today’s budget, there is also a sense of missed opportunity in terms of not pushing the boat out enough on entrepreneurship,” said Grant Thornton tax partner, Peter Vale.
“We have done a huge amount, correctly, to make Ireland an attractive place for foreign investors. Today was an opportunity to do something for Irish entrepreneurship, one that unfortunately was missed.”
Dublin Chamber chief executive Gina Quin echoed those thoughts, saying Ireland trailed the UK in nine out of 11 “essential tax categories”.
“Ireland’s tax policy needs to support people who want to take the risk on real job creating investments,” she said. “I hoped that Budget 2016 would throw open the door to entrepreneurs with an appealing tax regime for startups and small firms. The changes announced in Budget 2016 have opened the door, but only by a crack.”
The Association of Chartered Certified Accountants (ACCA) Ireland said the move brings the country “back within the realms of competitiveness”.
Meanwhile, the capital acquisitions tax threshold — which typically applies to the transfer of assets such as a house from parents to their children — is to be increased to €280,000 from €225,000 to reflect higher property prices.
The relatively modest increase is likely to make little difference in the urban at which it is targeted, however.
Reports in the lead up to the budget suggested members of government were considering increasing the threshold to €500,000 — close to where it was six years ago.
The rate, which stands at 33% having risen from 20% in 2008, applies on the value of the asset over and above the threshold.
“Homeowners have seen the value of their properties soar in recent years particularly in Dublin thanks to a recovering property market,” said Ernst & Young head of private client services, Audrey Lydon. “This has raised concerns for many parents about the amount of tax that their children will have to incur after their death. Unfortunately, today’s measure is not going to do anything to alleviate these concerns.
“While the increase is welcome it does not go far enough to alleviate the burden many families will endure when inheriting the family home.”