Policy Updates: June 2024

Sub-minimum rates recommendation

Last week, the Low Pay Commission published a report on sub-minimum rates of the National Minimum Wage. The Low Pay Commission has recommended the abolition of all sub-minimum rates, for all employees. The minimum wage for those aged 19 is 90% of the prevailing rate, for those aged 18 it is 80% and for those aged 17 and under it is 70%.

Commenting on the publication of the report, Minister for Enterprise, Trade and Employment, Peter Burke TD said: “My Department will now commission an economic impact assessment and seek legal advice on the Low Pay Commission’s recommendations. A Government decision on the Low Pay Commission’s recommendations will then be made in due course. In doing so we will have recourse to the SME test which is a key element of my 15 point business supports package announced last month.”

The report is available on the Low Pay Commission website at gov - Publications from the Low Pay Commission (www.gov.ie)

The SFA will make sure that the updated SME test will ensure that a common-sense approach prevails.

Changes to Capital Gains Tax for Family Businesses

The capital gains tax (CGT) at a rate of 33% is imposed on business owners who wish to sell their business or transfer it to their children. Currently, family business owners aged between 55 and 65 and who qualify for retirement relief can transfer their business to their children free from CGT in many cases. Once they reach 66, a €3 million cap applies to the value of any business they wish to transfer to their children with any gains above €3 million being subject to CGT at 33%.

The recent changes to CGT and retirement relief are as follows (from the 1^st of January next year):

• A limit of €10 million will apply to the value of business assets that family business owners aged between 55 and 69 could pass free of CGT to their children.
• The €3 million cap referred to above will now apply from age 70 onwards (instead of 66).

Support Programmes for SMEs

Last month, the Small Firms Association has welcomed the Government’s new support package for small businesses. In particular, the SFA welcomes the double ICOB payment introduced for businesses in the retail and experience sectors the increase the employer PRSI threshold from €441 to €496. Some of the other measures that the support package for SMEs includes the following:

• Implementing an enhanced ‘SME Test’ on business cost implications of future Government decisions.
• Reopening the Increased Cost of Business Scheme for another 14 days.
• Launching a second phase of the Cost of Business Scheme targeted at businesses in the retail and hospitality sectors.
• Increasing the maximum amount available under the Energy Efficiency Grant Scheme to €10,000 and reducing the business contribution rate from 50% to 25%
• A new online National Enterprise Hub for SMEs to access information on the wide range of Government business supports.
• Utilising the €1.5bn surplus in the National Training Fund to future proof workforce skills in SMEs.

For any queries on these or other policy related topics, please contact SFA Public Affairs Lead, Jonathan McDade - jonathan.mcdade@sfa.ie.