Tax-free vouchers for employees doubled to €1,000 amid budget business supports

The Government said it is doubling to €1,000 the amount that employers can give workers by way of tax-free vouchers a year, as it also unveiled a series of supports for businesses as they struggle against soaring inflation.

Speaking at the announcement of Budget 2023, Minister for Finance Pashcal Donohoe said the planned tweaks to the so-called small benefit exemption also mean that employers will be permitted to grant the payments of up to €1,000 by way of two vouchers. The changes will apply in the current tax year, he said.

Minister for Public Expenditure and Reform Michael McGrath also confirmed the planned introduction of a €200 million targeted crisis scheme for viable but vulnerable businesses in the manufacturing and internationally traded services sectors which are suffering the broader effects of the war in Ukraine as well as increasing energy costs.

One strand of the scheme will provide up to €2 million in grant aid for energy-intensive companies affected by the exceptionally severe increases in gas and electricity costs, according to the Government. It will be administered through Enterprise Ireland, IDA and Údarás na Gaeltachta and eligible businesses must produce an energy efficiency plan on how they will push their energy costs down. Another strand will involve loan notes.

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The Government also unveiled a €1.2 billion State-backed Ukraine credit guarantee scheme that will provide low-cost loans to SMEs and primary producers of up to €1 million, on a six-year term. No collateral is required for loans up to €250,000, according to the Department of Enterprise, Trade and Employment.

[ Budget 2023 main points: Vacant homes tax introduced, excise reductions on fuel extended, tax credits for renters ]

[ Putting money back in people’s pockets will not offset effects of ongoing inflation ]

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[ Standard rate income tax threshold rises €3,200 to €40,000 ]

This is in addition to a new so-called growth and sustainability loan scheme, which will make up to €500 million in low-cost investment loans of up to 10 years available to SMEs, including farmers and fishers and small mid-caps. A minimum of 30 per cent of the lending volume will be targeted towards environmental sustainability purposes.

However, the flagship measure in Budget 2023 to help Irish enterprise is the €1.25 billion temporary business energy support scheme which will pay up to 40 per cent of the recent increase in unit price of electricity and gas bills.

The plan, to run between September and next February, will be open to all tax-compliant businesses that experience increases of at least 50 per cent in their electricity unit costs in 2022 compared to last year. Monthly payments will be capped at €10,000 for each company.

Elsewhere, Mr Donohoe said the Knowledge Development Box, a regime introduced in 2016 that levies an effective tax rate of 6.25 per cent on profits from intellectual property that is the result of qualifying research and development, will be extended by a further four years.

He is also extending a scheme introduced in 2018 that enables private companies to give shares to employees in a tax-efficient way — known as key employee engagement programme (Keep) — will be extended until 2025, albeit with some tweaks. Tax incentives from the Keep scheme cost €600,000 last year, well below the budgeted €10 million, as the rules and conditions attached were too complex, according to KPMG

Mr Donohoe also said that he is extending a scheme providing tax breaks to multinational firm executives relocating to the Republic — the special assignee relief programme, until 2025. However, he is increasing the minimum annual salary for an individual to be eligible for the scheme to €100,000 from €75,000.