Minister Noonan started off with claiming that Ireland is “well on course” to restoring our sovereignty. The Budget includes €2.5 billion in cuts and taxes and contains 25 pro–job and pro–business measures. The Peninsula Ireland Blog has created a short synopsis of the key impacts of Budget 2014 and how it can affect your business:
Key Issues
- No change to the Income tax bands
- No change to the 12.5% rate of corporation tax
- 50,000 jobs to be created over the next year
- Maternity pay cut to €230 per week
- Introduction of Pathway to work 2 scheme
- Illness benefit waiting days have increased from 3 days to 6 days
Job Creation
- A target has been set to create 50,000 jobs next year along with the introduction of grants and schemes available for entrepreneurs starting their own business.
- Pathways to Work 2 will be launched which is aimed at stimulating jobs and training – this initiative will see €1.6bn for work placements and training, 94,000 of the 300,000 places will be reserved for the long-term unemployed.
- A good boost for the construction industry with a TAX break for homeowners hiring registered builders for home improvements and VAT back on home improvements costing between €5,000 and €30,000.
TAXES and Initiatives for Businesses
- The tourism VAT rate is to stay low at 9%; this has been welcomed with relief from the hotel and restaurant sector as this reduced rate was supposed to be a temporary reduction from the rate of 13.5% in 2011. It could be an indication that this low rate has stimulated the tourism industry.
- Employees’ salaries are to remain the same as there is to be no change to income tax bands, rates and credits for 2014.
- There is to be no change to the 12.5% rate of corporation tax and the Government have said they are 100% committed to this rate. This will continue to be a major competitive advantage when trying to attract direct foreign investment in the country.
- An increase of 10c on 20 cigarettes, 10c on a pint of beer, cider or standard sprit measure and 50c extra on a 75cl bottle of wine. Off-licences and publicans may feel the effects of these changes.
- DIRT rate on savings to increase to 41%.
- There is to be an introduction of a subsidised financial training programme which will be available to small business owners to help them to manage their finances.
- Domestic companies will have the opportunity to receive tax credits for Research and Development.
Social Protection
- Jobs seekers aged between 18-22 and up to age 24 for new entrants after the 1st of January 2014 will have their benefits reduced to €100 per week. Employers may witness an increase in job applicants and unemployed graduates may have to seek employment opportunities outside of their chosen area of expertise.
- The maternity benefit is to be cut to €230 per week, this is estimated to save €30 million in 2014. Employers may find that recent mothers are returning to their positions sooner rather than availing of the additional maternity leave available to them. Employers who are currently “topping” up the maternity pay will feel the burden of having to increase their contribution.
- Employees will now have to be out of work sick for six days before they can claim illness benefit as the ‘waiting days’ have increased from three days to six days in this week’s Budget. Even though there is no legal obligation for employers to pay sick leave, existing sick pay policies and how they are worded will need to be checked carefully to see if the employer is required to carry the burden following this change.
Pensions
- The pension levy is being increased to .75% until the end of 2014, when a new 0.15% levy on pension funds will take effect from 2015.
