While advances have been made to bring the self-employed on a par with workers by extending the remit of jobseeker payments to the self-employed from the end of 2019, the earned-income credit which is the equivalent for the self-employed of the €1,650 PAYE tax credit which workers receive will only increase from €1,150 to €1,350 from I January 2019. Equalisation of these credits would be worth €6 a week to a self-employed individual.
With traditional financing methods remaining difficult for SMEs, crowdfunding is gaining in popularity. While Minister Donohoe’s announcement that a review of regulation of crowdfunding is welcomed, caution is required in order to ensure that costs associated with regulation do not act as a deterrent from a lender’s perspective and are not passed on to the borrower.
For dual-income families where one spouse only pays income tax at the higher rate the increase to the standard rate band will be of limited benefit because the amount of the standard rate band which can be transferred to the higher earning spouse remains capped at €9,000.
While an extensive range of social housing initiatives were announced, they are unlikely to be of assistance in particular to dual-income households where both are middle earners. Even the reintroduction of a rent tax credit could have assisted those particularly in larger urban areas who may also have significant childcare costs.
While on the one hand Minister Donohoe has imposed a VRT surcharge on diesel cars, he has only committed to allowing VRT relief on hybrid cars until the end of 2019 and incentives aimed at encouraging the purchase of gas vehicles are aimed at commercial rather than private vehicles. This is limiting private car owners’ opportunities to move away from traditional diesel cars.
DIRT on savings fell to 37% this year and the Government has committed to cutting it to 33% by 2020, to bring it in line with the capital gains tax (CGT) rate. While it would be a very expensive undertaking for the Government, many investors who were forced to move away from traditional savings accounts due to very low interest rates had hoped that exit tax, currently levied at 41% would be reduced to be in line with DIRT.
For those who currently do not pay any income tax at the higher 40% rate the increase in the standard rate band from €34,550 to €35,300 will not have any impact. While a worker for example earning €30,000 will see their USC being reduced by €39 over the course of 2019 when inflation is taken into account they are actually likely to be poorer in 2019 than 2018.
Another aspect of Budget 2019 which could have a negative impact on those starting out in life is the VAT increase applicable to hospitality – this could for example add significantly to the cost of a wedding reception.
Drivers & Car Owners
For those workers who commute long distances diesel cars remain the optimum choice and many are forced to upgrade their car often due to high annual mileage. The 1% VRT surcharge on diesel cars will impact them when they upgrade their car.
Those aged 65 or more are exempt from income tax where their annual income is no more than €18,000 in the case of a single individual or €36,000 in the case of a couple. For an elderly individual who for example has relatively modest rental income or a pension from their former employment, increases to their old-age pension can have the effect of disproportionately increasing the income tax payable in some instances.