Budget 2016 - For Tradesmen, Construction Workers and Self Employed
The Irish budget announcement used to be a time of expectation, surprise and mixed-emotions at the result (with the main emotion being disappointment) - but now the surprise element is largely missing. With many measures already leaked or announced pre-budget, this year there weren't too many things for Irish Tradesmen to jump up and down about when the dust had settled.
Seen as a pre-election budget by many, Budget 2016 was largely a positive one for self employed tradesmen and contractors - albeit one that will hopefully not ruin the country's delicate economy and that will evolve through upcoming negotiatons to better tackle the housing crisis
So that said, what does Budget 2016 hold for the Tradesmen of Ireland ? Here are the bullet points:
- Your Take Home Pay - Seen as the main measure of a budget for many, most Tradesmen will not be disappointed. There are some direct measures that will increase the amount of money that goes into your wallet each month. These include a reduction in all three USC rates and an increase to the threshold at which you start to pay USC from €12,012 to €13,000 per annum. Additionally - and long overdue - the introduction of a Tax credit for self employed workers of €550 per annum will deduct that amount from your annual tax return. This still doesn't match the tax credit of €1650 automatically given to PAYE workers, but its a start!
- Family Gains - If you are a Tradesman with Children, you stand to gain further. Hailed by many as the 'Family Budget' the government have introduced free pre-school care for children aged 3 until they start school (up to 5.5 years old). This will greatly reduce child minding / creche fees. Additionally father Noonan has added an extra €5 to child benefit each month, increasing it to €140 per month. On top of that there is the introduction of 2 weeks paternity leave for new Dads - but realistically will Tradesmen take 2 weeks off the tools ? The good news is that you can take it up to 28 weeks after the birth of a child and it is worth up to €460. Also of note is the planned extension of free GP care for all children under 12 (subject to negotiation)
- Commercial Vehicles - The minister has been particularly kind on commercial vehicle tax, eliminating the myriad of different tax bands to just five bands. Its now much easier to understand being based on the weight of the vehicle, with prices starting from €92 to €900 - down from €333 and €5,175 respectivley.
- No Increases - Sometimes no news, is good news. The government held off increasing tax on petrol and diesel which will be a relief for many tradesmen who clock up significant miles. While the price of 20 ciggies has increased by 50 cents per pack overnight, enjoying a pint of plain (or any alcohol) will cost the same in 2016 as it does today.
- Pensions - If you are lucky enough to have pension, the government has scrapped the existing pension levy of .15% on all private pension schemes.
Other things you should know:
- Cashless Payments for Tradesmen - If you're not accepting cashless payments already, then you should really check out our TradePay system as the Irish government has made big changes to incentivise your customers to pay by credit you debit card! Budget 2016 has reduced card charges for retailers and increased charges for ATM withdrawals - from a €5 per annum stamp duty fee to a whopping 12 cents per transaction. It's only a matter of time now until your customers are asking you ' Can I pay your by card' ? With TradePay your answer is 'Yes!'
- Employers - If you an employer, you need to consider a few things. If you pay the minimum wage, it has now increased from €8.65 to €9.15 per hour. Also if a male employee has a new child after September 2016, they are eligible to a statutory 2 weeks paternity leave. It doesn't come out of your pocket - the government pays for it - but they are allowed 2 weeks off unpaid.
Things that could be better for Tradesmen:
- Housing stock / Building activity - It was thought that the government would do more to tackle the housing crisis and in capital project investment. As it happened they committed to Nama delivering 20,000 new housing units by the end of 2020. This is not a new development and 90% of this will be delivered in Dublin. New housing has a knock-on effect for tradesmen in terms of generating jobs for improvements, fittings etc. In most circles 20,000 new homes over 4 years is seen as disappointing, particularly when only 4,000 will be delivered next year.
- VAT Rate - calls for a reduction in VAT to 9.5% by the CIF to mirror that of the hospitality sector were ignored. This would have had the potential to further stimulate the sector.
Obviously the actual impact of Budget 2016 is individual to each Tradesman's personal circumstances, so dig a bit deeper by talking to your accountant on how it will actually effect you. We do hope however that this guide has gone some way to assisting you in wading through all the general information out there.
Until budget 2017 - happy constructing !
You can contact us here or on twitter @onlinetradesmen
About the Author