With Budget 2021 only days away, we have compiled a number of tax measures to assist our clients in the coming year. 

In a year that no one could have foreseen, Budget 2021 is more important than ever for Ireland.

There is always some level of uncertainty surrounding what the Budget will contain and how it may affect our clients.

However this year, with Brexit looming, and Covid-19 at the forefront of everyone’s mind, we look to the Government to not only to provide us with as much individual support as possible but also to provide the vital stimulus measures required to protect and boost our economy in the coming year. With this balancing act in mind, the below list contains some of the measures we would like to see in Budget 2021:

  • A reduction in the Capital Gains Tax rate from 33%. This should encourage asset-based transactions and facilitate a larger amount of vendor proceeds to be available for recirculation into the Irish economy. We would like to see a reduction in the CGT Entrepreneur Relief’s “investors working time” requirement, as this would allow individuals with available funds to invest in a number of business ventures – which should in turn assist the larger business community and allow for diversification of the investor’s investment portfolio.
  • Extension of the current reduction in the 23% VAT rate beyond February 2021, together with a reduction in the VAT rate in the hospitality sector to 5% bringing it in line with the UK and Northern Ireland. This should afford businesses and customers alike a degree of assistance and certainty in the coming year.
  • Accelerated capital allowance in relation to fixtures and fittings used to facilitate social distancing and promote the health and safety of businesses customers and staff. While this measure is unlikely to create an immediate cash flow benefit for businesses, it will immediately benefit businesses once they return to profitability and will encourage responsible business practices.
  • Accelerated research and development (“R&D”) tax credit refund timeline for SMEs. Currently where a company is loss making and claiming the R&D tax credit as a refund, they will receive that refund over the following three years. Accelerating the refund timeline for SMEs would improve SME cashflow, encourage further investment in R&D and attract further foreign direct investment into Ireland.
  • The introduction of a new home office equipment tax credit. This would allow individuals to claim a certain amount of income tax back on purchases used to create improved at home working capacities. This should allow for more favourable remote working conditions and increase the longevity of new working from home employment arrangements. This would allow our society the opportunity to gradually return to the “normal” working week or perhaps create a “new normal” working week moving forward.
  • An amendment to EIIS relief legislation. Currently. where an individual claims EIIS relief on an investment and subsequently makes further investment in same company in later periods, a clawback of relief may arise if any exit takes place during any of the relevant compliance periods.  We would propose that the EIIS legislation is amended to permit investors to be exit such investment on a first In first out basis.

While these are our “wish list” items, we will have to wait for Budget day 2020 (13 October 2020) to see how the Government plans to balance our society’s many competing interests in what must be the most unprecedented economic landscape of our times.

In the meantime, if there are any matters announced in the lead up to or on Budget Day 2020 that you would like to discuss or if you would simply like clarification in relation to its impact on your personal/business affairs, please contact Alma O’ Brien on (01) 669 9999.

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