Tradesmen - Budget 2019 for Self-Employed Tradesmen Explained

we take a top down look at Budget 2019 and how it effects self employed Tradesmen and Trade professionals.

Another year, another budget. This year’s version certainly had the air of an ‘Election Budget’ – trying its best to please everyone (at least a little bit).

The general view is that it fell short in many areas, but here we look specifically at how it affects the thousands of self-employed Tradesmen and Trade professionals across Ireland.

Tradesmen’s Pockets – Emptier or fuller?

Many will rightly gauge how successful a budget is by asking this simple question – “Am I taking more money home each week?”

Once the face of it from Budget 2019, the answer is ‘Yes’ for self-employed tradesmen and trade professionals. Albeit only slightly.

Increase in earned-income tax credit

For starters the government have extended the earned-income tax credit to 1,150, meaning self-employed operators will pay €200 less tax per annum. Yippee!

Before you get too excited though, bear in mind that this is still short of the €1,650 credit earned by PAYE workers. So the discrepancy between self-employed and PAYE still exists – despite the former status as risk takers and entrepreneurs. Go figure.

USC changes

USC had a few decent changes in Budget 2019 too. It was announced that the 2.5% rate of the USC would be reduced back to 2% per cent, the ceiling for this rate raised by €600 to €18,722, and that the higher 5% rate be dropped to 4.75%. The entry point for charging USC was kept at €13,000.

What does all of that actually mean to you as a Tradesman? Irrespective of what you are earning, you will save a few quid on USC also. As an example, if you are lucky enough to earn €70,044 per anum, you will see savings of €175 per anum.

Reduced Tax Rates

The last mover in the Budget was an increase in the threshold for the higher tax rate of 40%, meaning that an individual can now earn €34,550 pa before they hit the higher rate – up from €33,800 pa – and married one-income family can earn up to €43,550 per year at the lower rate (up from €42,800).

Our Tax Verdict

The verdict on take home pay for tradesmen from Budget 2019? The net result of this is no more than €500 in your pocket per year after the tax man carves out his slice. It also means that the effective tax rate (Income tax + USC) in Ireland remains very high, with anyone earning above the €70,044 figure paying 52% in tax. Comparatively that makes Ireland an expensive place to work, but the few extra euros should be welcomed.

Tip to Reduce your tax bill

One measure that could be considered for Tradesmen to reduce their effective tax is the use of electric vehicles. Budget 2019 announced a 0% benefit in kind rate for electric cars in 2018. Talk to your accountant - it might be worthwhile all around investing in a cleaner electric motor in 2019.

Welfare benefits for Self Employed Tradesmen

Continuing measures from the previous year’s budget, Budget 2019 confirmed that from December 2019 self-employed tradesmen and trade professionals will be able to claim Jobseekers benefit (a.k.a the dole).

This will be seen as a welcome relief by some, and an ‘about time’ measure by the majority. Don’t get us started on the topic – but suffice to say that penalising the self-employed by restricting their access to social welfare benefits when they go out of business was just, well, mean.

It is understood within the sector that this is a result of the self-employed paying a lower PRSI class ‘S’ rate than their PAYE counterparts, but many Tradesmen would have welcomed the option to pay more PRSI to secure more welfare benefits. Now at last it seems to be happening.

The upshot is that things are improving for self-employed tradesmen in Ireland. Sure, there is still no access to short-term illness benefits among some other benefits available, but its a much-needed step in the right direction. It’s just a shame that you will need to wait until December 2019 for it to come into force.

Hopefully, the effects of Brexit in the meantime do not slow down the sector and force some self-employed tradesmen out of business. 

The Big Picture – Housing and Infrastructure

Certainly, the government has put its money where its mouth is in terms of committing to major increases in housing and capital infrastructure. With €2.3Bn being pledged to housing programmes in 2019, it means a 26% increase in investment from the government. Of that €1.25Bn will be allocated to social housing.

While much of this spending will be shared out among Large building contractors in the state, the knock-on effect will be sustained work for self-employed tradesmen and trade professionals. This will surely help buffer against any major economic shocks that result from a bad Brexit outcome.

Hopefully, the government have done their sums and all their measures are enough. 

Builders Holidays 2018 - See How Many Are Taking Them And Why You Should Irish Tradesmen: Home Improvement Outlook For 2019