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Impact of Budget 2013 on SME Business and Individuals



Budget 2013 Analysis and Commentary                                                                       05 December 2012

Rory Meehan, Partner, Head of Tax at RSM Farrell Grant Sparks analyses the main implications from Budget 2013 on SME businesses in Ireland and individuals following today’s Budget 2013 announcement.


Today’s Budget did attempt to focus on the indigenous business community through a number of measures comprising tax relief and availability of funding.


Impact on SME businesses


The 10 Point Tax Reform Plan introduced a number of positive measures such as reforming tax relief for start-up companies to allow unused credit to be carried forward, increasing the threshold of cash receipts for VAT to €1.25 million and the extension of the Employment and Investment Incentive Scheme (EIIS) to 2020. The increase in the level for the application of close company surcharges does represent a meaningful relief for many small businesses.




The following changes will be made to self-employed, employed and modified contributors:

  • The minimum amount of PRSI contribution for a self-employed individual will increase from €253 per annum to €500 per annum.
  • The weekly allowance for employees from PRSI will be abolished.  This will mean that on average, employees will pay an extra €5 per week, €22 per month or €264 per year in PRSI.
  • Employed contributors will suffer PRSI on all “unearned income” (e.g. deposit interest, dividends and rental income).

Personal tax


The Budget also introduced a wide range of personal taxation measures that will affect all sections of Irish society.


Although the Budget did not make any dramatic change to the overall income tax rates, tax credits etc., a number of measures were introduced which will affect a large number of people such as, tax on maternity benefits, residential property tax, increased PRSI, the application of the Universal Social Charge to people over 70; increasing the rate of Deposit Interest Retention Tax (DIRT) to 33 percent; increasing the VRT and motor taxation rates from 1 January 2013.




When the dust has settled and the devil in the detail becomes obvious will business eventually suffer as a result of higher demands for wages and salaries to counteract the personal tax cost.

It is disappointing that in its second year in office, the Government could not develop a more focused strategy for the Irish Economy.


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