What Does Ireland’s budget 2023 Mean for Your Business – and Where Can You Go for Further Advice?

Ireland’s 2023 budget, unveiled on 27th September, had an admirably clear overall goal: to “deliver money back to individuals and businesses”, providing “a buffer against recent cost of living increases.”

But the order of those priorities is revealing, and the budget does indeed appear to contain more support for individuals than for businesses.

What good news, then, if any, is there to report from the business perspective? Happily, there’s perhaps more to this than initially meets the eye.

Energy costs tackled

A State Aid Scheme, known as the Temporary Business Energy Support Scheme (T-BESS) has been set up for businesses – including farmers – in order to alleviate the burden of increased gas and electricity costs.

If your average per-unit price of energy is more than 50% higher in 2022 compared to the same period in 2021, you can register for the scheme on a self-assessment basis, and it will cover 40% of the increased bill, subject to a maximum of €10,000 per premises, per month.

The first payments are expected to be made in November, backdated to September, and the scheme is planned to run to at least February 2023.

But it’s far from done and dusted yet, as we explain below.

Real action on global impacts

The conflict in Ukraine has shown us all just how fragile a globalised economy can be, and the budget has taken this to heart.

There will be a new scheme providing grants, equity and loans to viable but vulnerable businesses in the manufacturing and internationally traded sector that have been impacted by the broader effects of the war in Ukraine.

In addition, the new Ukraine Credit Guarantee Scheme will offer a state-backed, low-cost loan for businesses of up to €1 million over a six-year term, with no collateral required for loans up to €250,000.

Benefits for balance sheet and planet (but for how long?)

At the same time, the budget has recognised the link between energy use and cost, and environmental impact, with the announcement of the Small Firms Investment in Energy Efficiency Scheme – a new grant provided through Local Enterprise Offices to help micro-enterprises reduce their carbon footprint and energy consumption. (No detail as yet on how much money will be available, though).

Similarly, a new, longer-term, low-cost loan of up to €500,000 for up to 10 years, to help Small and Medium Enterprises (SMEs) including farmers and fishers to expand or invest in sustainability or energy efficiency, will be launched in the market in the first half of 2023.

Electric vehicles also make an appearance in the budget, although the news on this front sounds, frankly, like something of a sneaky reversal where sustainability is concerned. The current benefit-in-kind (BIK) threshold for electric company cars, which essentially exempts drivers from BIK if the value of the vehicle is under €50,000, will shrink to €35,000 in 2023, €20,000 in 2024 and €10,000 in 2025, and to zero by 2026.

A new BIK rate of up to 22.5% will then be applied – lower than the current 30%, but still leaving electric company car drivers out of pocket once the reductions in the BIK threshold are taken into account.

Employees better off

There is a definite underlying commitment in the budget to enabling businesses to perform more strongly by better rewarding their staff.

The standard rate tax band for instance, will be increased by €3,200 to €40,000 for a single person, and to €49,000 for married couples with one earner.

Individuals’ tax credits will also go up, with an increase of €75 to €1,775 for Personal Tax Credit, Employee Tax Credit, and Earned Income Tax Credit.

Together with an increase in the level at which employees pay Universal Social Charge (USC) – from €21,295 to €22,920 – and the pre-budget announcement of an 80% rise in minimum wage from January 2023, these measures potentially put quite a bit more money in many employees’ pockets.

But the budget also hands businesses a golden opportunity to demonstrate increased goodwill to their employees, too, with changes to the Small Benefit Exemption – which enables you to reward your employees with tax-free vouchers and gifts – set to rise from €500 to €1,000.

Of course, all these changes mean your Finance and Payroll people have to be on top of what’s coming – and if they’re not, you’d be well advised to seek some external help.

Sector-specific changes

Farmers, landlords and property rental companies, and hospitality businesses all come in for some special consideration in the budget to a greater or lesser extent, and you can learn more at Citizens Information, here.

Is it all upside?

As we hinted above, it’s not all in the bag quite yet.

The planned T-BESS measures, for example, are all contingent on approval of the legislation not only by the Dáil and Seanad in October, but by the EU, as their state aid rules mean there is a cap on the amount of support a government can provide to any one business.

Dublin could be hurdle enough on its own – but could further objections sprout from Brussels?

Start and end dates for some of the budget changes also seem vague in places – so be aware that whilst help is on the way, it may not be on the way quite yet.

What you need to do next    

The budget changes will of course take effect without any action on your part, but you need to be in a position to thoroughly understand what effect they will have on your planning and forecasting outcomes (not least because if you don’t, you risk missing out on opportunities to capitalise on them effectively), as well as on your day-to-day financial operations.

For more information on how you can use EFM Ireland’s team of Finance and business management experts on a pay-as-you-go basis to help your business get the most from what the new budget makes possible, get in touch today.


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