Budget 2014 - What To Expect
Minister for Finance, Michael Noonan will deliver his third budget on the 15th of October 2013. For the past 10 years Budget day in Ireland has been in early December with most changes taking effect from January. However new EU rules mean that the budget this year has been brought forward. This change is something that retailers have in fact been asking for in order to boost Christmas spending.
Every year the government start to indicate in advance what is likely to be implemented. Here we take a look at what may have an impact on small businesses and the self employed.
VAT reform
The 9% VAT rate that was brought in to boost the tourist and food industry is due to expire on the 31st of December this year. There have been strong calls from lobby groups to retain the rate however Michael Noonan has gone on the record as saying that in order to do so he would have to find €350k of savings elsewhere. Whether he keeps it or not we do not know but the 9% rate will definitely be a major announcement either way.
PRSI
There are several proposals in relation to VAT that are likely to be introduced.
- There is speculation that the rate of PRSI will be increased for all self employed people to 6% (currently at 4%)
- The introduction of a 3rd band of employer's PRSI contributions of 17%. This would be charged on the portion of salaries above €100,000
- At the moment self employed people pay PRSI on investment income such as rental property. PAYE workers do not however. This is a change that could potentially bring a lot of additional tax income so it is likely to be strongly considered.
- People in the PAYE system earning over €100k may also have to pay the surcharge of 3% PRSI (self employed people already pay this).
Pensions
Big changes are likely to come in relation to pensions again. There has been a lot of debate about lowering the threshold on pensions so that once you go over possibly 1.2 million you can no longer claim such a tax deduction. What the figures will be we do not know however one thing is for sure the tax savings available are reducing so it would be a good time of year to consider topping up any pension contribution you are making.
Other areas that are likely to come into the budget are further increases in Capital gains and inheritance taxes- perhaps to as much 35%. Water charges and limited free GP care could also be introduced.
TaxAssist Accountants will produce a full Budget summary on the evening of the budget outlining the issues that affect small businesses and the self employed.
We will publish our summary of how Budget 2013 affects your small business on our website here.
Last updated: 26th September 2013