A mixed bag - SFA reacts to Budget 2025

• Small Firms Association reacts to Budget 2025
• SFA welcomes some of the measures designed to assist businesses.
• Concern that the 80-cent increase in the National Minimum Wage will increase business costs.

Tuesday, 1 October 2024 - The Small Firms Association (SFA), the representative body for businesses employing fewer than fifty people, has reacted to Budget 2025. Overall, the SFA is pleased that the Government has listened to some of its proposals to support small businesses.

The SFA is concerned with the 80-cent increase in the National Minimum Wage to €13.50 but welcomes the various measures to support small businesses such as the increased threshold in the R&D tax credit, the two-year extension of the Employment Investment Incentive, the Start-Up Relief for Entrepreneurs and provide for an increased lifetime limit on gains to which the relief applies from €3 million to €10 million.

The SFA is also pleased that the Employment Investment Incentive, the Start-Up Relief for Entrepreneurs and the Start-Up Capital Incentive have been extended for a further two years to the end of 2026. The increase in the VAT registration thresholds for the supply of goods is another positive step. However many of these schemes remain cumbersome for small business owners who do not have the resources of larger firms.

Reacting to Budget 2025, David Broderick, SFA Director said:

“In the absence of additional detail, Budget appears to be a mixed bag for small businesses. Concerns for rising labour costs remain due to the announcement of 80 cent increase to the National Minimum Wage. The SFA welcomes the increases in the thresholds for R&D tax credits, the two-year extension of the Employment Investment Incentive, and the VAT registration thresholds for the supply of goods.

“Going forward the Small Firms Association believes that the Government must introduce a more targeted measure like PRSI rebate to assist small businesses with the transition towards the Living Wage rates.

“One in three businesses that the SFA recently surveyed stated that they will run out of liquidity within six months without any additional financial supports. 83 percent of businesses surveyed stated that costs have risen in the past year which further emphasis the challenging environment for the small business community.”

In July the SFA made a pre-budget submission which focusses on three topics creating better conductions for businesses to survive and hopefully flourish. They were tackling business costs, easing the tax burden, and upskilling the workforce. Within those three categories, the most pressing request are as follows:

1. The introduction of a PRSI rebate to assist small businesses with the transition towards the Living Wage rates.
2. Develop a creative tax system that can best support small firms.
3. Introduce National Training Voucher Scheme, which has the potential to boost in-company training and widen participation in upskilling and reskilling employees.

In May, the SFA published its survey on business costs. The survey, of almost 500 businesses nationwide, found that eighty-three percent of small businesses have experienced rising costs. The research also showed an estimated increase of 16.6 percent in average business costs. 57 percent of businesses say that labour costs have contributed to rising costs Alarmingly, 35 percent of businesses stated that they could not trade beyond six months without additional funding. The SFA’s ‘cost of business’ survey also showed that 45 percent of small businesses say insurance costs have contributed to overall rising costs while 37 percent cited an increase in raw material costs.

ENDS

Note to Editor:

• For additional queries, please contact Jonathan McDade, SFA Public Affairs Lead at 087 625 3551.
• Link to SFA Budget proposal here.
• Link to ‘Cost of Business’ report here.
• The Small Firms Association proudly represents a diverse membership of businesses with less than 50 employees: homegrown and spanning every sector of the economy with members found in every town and every city in Ireland.