Significant moves are expected in Budget 2020 to help entrepreneurs, including changes to a number of schemes aimed at assisting companies with high growth potential.
The changes will be set in the context of Brexit and the need to ensure the regime for these kind of start-ups is competitive with other locations, including the UK. It will also be presented as a programme to help the development of the indigenous sector.
The Department of Finance completed public consultations of the range of reliefs available to entrepreneurs earlier this year. The key reliefs available relate to capital gains tax for people selling stakes in businesses, a scheme relating to share options and a scheme offering income tax relief on money invested in SMEs.
Entrepreneurs have complained the reliefs are too restrictive and do not do enough to promote potentially high-growth firms, which typically require significant investment in their early stages and face serious cash-flow pressures.
Among the schemes likely to be improved is KEEP– Key Employee Engagement Programme – introduced in 2017 and designed to remove the need for employees to pay tax on share options in certain cases. Capital gains tax is still charged when the shares are sold.
Another scheme where changes are expected is the EIIS – the Employee and Investment Scheme – under which investors can get relief against income tax for investments of up to €150,000 a year. It is one of the few special income tax reliefs left in the Irish tax code.
A range of accountancy companies and business groups – including Ibec, the Chambers of Commerce, and Scale, a new entrepreneurs’ lobby group – have said that the current rules surrounding these schemes are too restrictive.
Among the demands have been increases on the qualifying limits for the two programmes and other restrictions. Lobbyists have also called for changes in a scheme offering capital gains tax relief – aimed largely at serial investors – but it is not clear if this will be targeted in the 2020 Budget package.
Business sources said that signs of movement were welcome, but that the crucial issue would be the details, which will be included in the Finance Bill published after the budget.
