Budget 2019 individuals and entrepreneurship

Perspectives

Individuals

Budget 2021

Key measures:

  • As had been largely flagged, there are no changes to any of the income tax bands or credits (other than the self-employed and the dependent relative credits) in this Budget.
  • The self-employed earned income credit will be increased to €1,650 to equalise with the equivalent credit available to PAYE workers and the dependent relative credit was increased from €70 to €245.
  • Tax debt warehousing has been extended to include the balance of income tax due by relevant individuals for 2019 and also preliminary tax for 2020. Their deferral period will be one year, with 3% interest applying thereafter.  Importantly no surcharge will apply for late payment.
  • Small changes have been made to the universal social charge. The second rate band has been increased to €20,687.
  • Some changes have also been introduced to support the agricultural sector. The Minister announced the extension of both the stamp duty consanguinity relief and farm consolidation relief to end 2023 and 2022 respectively.

Who will be affected?

Both employed and self-employed individuals will benefit from the modest changes to USC, but the self-employed will also benefit from the implementation of the programme for government commitment of the earned income credit and the ability to defer the payment of income tax for a period of 1 years.

Our view

The extension of the tax debt warehousing for the balance of 2019 income tax liabilities and 2020 preliminary tax is a welcome measure and will provide some level of relief for those relevant individuals who have seen a significant drop in income over the last 6 months. It may also provide a liquidity lifeline to certain businesses and coupled with other measures protect jobs in the longer term. The detail of who can avail of this measure has yet to be outlined.

The Minister may have missed an opportunity to provide an additional liquidity lifeline to the Exchequer by reducing the CGT rate. History has shown that a rate reduction actually resulted in a significant increase in CGT receipts as it incentivised people to dispose of assets rather than hold them. Maybe we will be pleasantly surprised in the Finance Bill.

Explore Deloitte's insights and perspectives on Budget 2021

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