Chartered Accountant Interim Managers’ (CAIM) commentary on Budget 2018 for Self-Employed Independent Professionals

While Budget 2018 has seen some progression in areas such as the introduction of a new key employee engagement programme (KEEP) and a reduction in the USC, it has been underwhelming for self-employed independent professionals (interim managers, consultants, freelancers).

According to Patrick Byrne, Chairman of Chartered Accountant Interim Managers (CAIM):

“While the overall budget is one of “a little bit for everyone” and therefore the expectations were modest, the stated government policy of supporting the self-employed is light in reality. The focus appears to be on Income Tax benefits rather than economic incentives.

  • The Earned Income Credit will increase from €950 to €1,150. Originally intended to be introduced in three years of €550 per annum (to become equal to the employee PAYE tax credit of €1,650) – the rate of increase has been €550 (2016) + €400 (2017) + €200 (2018) = €1,150. At this rate of progress, it could take another three years before it achieves parity with employees. In effect, the original absence of this tax credit, and its very slow introduction, means that the government rewards self-starters by taxing them more.
  • The changes in rate bands for Income Tax and rates and bands for USC are nominal – all combined they will result in an improvement of €308.00 per annum for people paying tax at the highest rate.
  • No changes were announced to the Entrepreneur Relief (for CGT) meaning Ireland continues to lag significantly behind the UK and Northern Ireland for CGT relief on gains arising from creating businesses.

CAIM believes that tax and economic policy in Ireland is not keeping up with the substantial changes that are happening in the structure of work, and policy remains firmly fixed on employees rather than on the self-employed.”

  • Patrick byrne

    There may still be some hope in the upcoming Budget where the €6m SAYE fund announced for share based payments to employees of qualifying SME’s will be rolled out. Clearly the fund is small relative to the scale of the SME market in Ireland but it is a start in the right direction. It is likely to be divvied out among applicants on a pro-rata basis relative to the scale of applications. there may well be some element of first come, first served involved as well so SME’s and their CAIM advisors need to be vigilant on this one.

    The top rate of CGT is much lower that top income tax and levy rate so the benefits of the incentive are clear. This may get more interesting again,as I heard mooted at the Budget briefing of an eminent accounting firm during the week, this relief was to be combined with the entrepreneurs relief – bringing the tax rate to 10% for amounts up to €1m.

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