PwC and the Family Business Network are calling for new and innovative tax initiatives in Budget 2022 to support Irish private businesses.

PwC’s 2022 Pre-Budget Submission for the private business sector proposes:

• Extending the EWSS to 30 June 2022

• Waiving the TWSS and PUP clawbacks for employees in certain situations

• Additional tax credits for people working at home

In Association with

• Increase the small benefits exemption by €1,000 for hospitality spend

• Extending tax debt warehousing to end 2022

• Reduce the interest rate on late payment of taxes

• Relaxation of employers’ PRSI for new hires previously unemployed

• Extending the 9% VAT rate for the hospitality sector to the end of 2023

• ‘Super deduction’ until 31 December 2023 for plant and machinery (including IT equipment for remote working) and capital expenditure on buildings/factories that receive a recognised accreditation for overall energy performance

• Accelerated tax write-offs for the development of regional hubs to create shared office spaces

• Tax deductions on rent for landlords in certain situations

• Temporary reduction in capital gains and capital acquisitions tax rates

• Similar to the UK, facilitate the transfer of businesses to the next generation without incurring upfront punitive tax costs i.e. pay an ‘upfront instalment’ of the gift/inheritance tax with the balance being spread over a longer term period

• Extending CGT exemption to early stage renewable energy projects to encourage release of assets to renewable developers and encourage the wider adoption of electric vehicles via a general scheme of tax incentives.

PwC tax partner Nicola Quinn commented that there is a growing fear amongst private businesses that the contingency funds and support measures will be largely exhausted as they head into 2022 and beyond.

“Particular attention will still be needed to continue to support our private businesses, employing some 45% of people working in Ireland,” said Quinn. “It would be very disappointing to see successful businesses fail just before they have had the chance to trade again. Now more than ever we need to continue to support businesses through a new stage of recovery and renewal.”

PwC tax partner Colm O’Callaghan (pictured) added that a key challenge for Irish private and family businesses is the efficient and affordable transfer of business assets.

“The retention of these businesses by their Irish founders is important not only for the future growth of the domestic economy but also for many these businesses are central to the survival of the local and rural areas in which they are situated," he said.

“We propose a consultation process with relevant stakeholders and the Department of Finance to explore possible measures to facilitate a burdensome free transition to the next custodian.”

The view from PwC is that high tax is currently preventing or delaying the efficient passing of wealth. In this regards, PwC and the Family Business Network are calling for temporary measures to reduce gift tax liabilities in order to encourage a transfer of wealth. Such measures would include:

• Introduce a temporary reduction in the Capital Gains Tax (CGT) and Capital Acquisitions Tax (CAT) rates to 20% (from 33% currently) for a period of two years and raise the gift and inheritance threshold from parents to their children to €500,000 (currently €335,000).

• Remove the arbitrary €3m cap on the value which can qualify for CGT Retirement Relief on the transfer of shares for those aged 66 years of age and older for a period of two years with a further review to take place at that time.

• Remove cash as a non-qualifying asset in trading businesses for CAT Business Property Relief purposes.

• Similar to the UK, consider Introducing a mechanisms to facilitate the transfer of businesses to the next generation without incurring upfront punitive tax costs e.g. an ‘upfront instalment’ of the gift/inheritance tax with any balance of tax being spread over a longer term period of at least 10 years.

• Increase the lifetime limit for Entrepreneur Relief to €5m. “The current limit of €1m is out of kilter with the marketplace and, in most cases, does not provide sufficient incentive for entrepreneurs to dispose of their businesses and reinvest in new businesses,” said O’Callaghan.