How Budget 2024 Will Impact Irish Business
Many professional advisers argue that Michael McGrath’s first budget doesn’t do enough to help firms cope with spiralling costs, writes
Finance minister Michael McGrath’s first budget has received a generally positive reaction from business, even if some measures smacked of an afterthought. Mystery still surrounds the promised package of €250m to assist small firms with their costs, while details behind a pledge to introduce Capital Gains Tax relief for angel investors will only emerge at the Committee Stage of Finance (No.2) Bill 2023 deliberations in the Oireachtas.
More certainty surrounds changes in R&D tax credits, tax breaks for private landlords, amendments to the Employment Investment Incentive, and extension of the CGT Retirement Relief age limit.
Brian Keegan at Chartered Accountants Ireland remarked: “It is positive to see the focus switching away from the headline corporation tax receipts and the enterprise sector being singled out and supported. These measures send the signal that Ireland is open for business and wants to support entrepreneurism.
“New CGT reliefs for angel investors should result in early funding being made available to businesses when they need it most — at inception. There have been few new initiatives for the corporate sector in the past decade, and it was positive to see recognition of the sector to Ireland’s economy.”
Other business advisers have more reservations. A post-budget survey of 450 accountants by the ACCA professional body found that two-thirds of respondents believe Budget 2024 has not done enough to help enterprises struggling with rising operational costs and high levels of inflation.
The ACCA survey highlighted ‘here and now’ concerns of focus of many SME owners in relation to the increase in the minimum wage, energy costs, and labour market skills shortages.
Small Firms Association director David Broderick also seized on the business costs issue, declaring that the budget missed an opportunity to respond to the rising cost of doing business that entrepreneurs and small business owners are facing.
“While the measures to support investment and growth in enterprises through an SME package is welcome, business owners will continue to struggle with rising labour costs, insurance rates, and dealing with the twin transition of digital and climate,” said Broderick.
KPMG partner Tom Woods’ budget verdict is that while the incremental budget improvements to incentives supporting domestic entrepreneurship are welcome, more can be done to increase the attractiveness of Ireland’s personal tax regime to attract mobile talent.
In Budget 2024, Michael McGrath tweaked income tax credits and thresholds, and made a small USC adjustment while leaving the rates alone. Daryl Hanberry at Deloitte believes the 52% to 55% personal tax rate is a disincentive to businesses locating in Ireland and employees taking on additional work.
“In light of the potential opportunities and risks arising out of Pillar Two, we need to ensure that the personal tax system is not a barrier to attracting and retaining talent in Ireland,” Hanberry argues.