Chartered Accountants Ireland has today circulated the Institute's Key Policy Priorities, based on member engagement, as discussions commence on the formation of the next Government. Focused on supporting small business and improving childcare provision for working parents, we will continue to amplify our members' voices as the negotiating process continues.

After a frenetic three-week campaign, General Election 2024 has essentially left us where we began – with a likely Government led by Fianna Fáil and Fine Gael albeit this time without the Greens.  The precise makeup of the final coalition is as yet unclear. However, given that the outgoing coalition’s collective seat take will likely not leave them far off the 88 seats needed to command a Dáil majority, it is safe to say that whoever gets the nod to make up the numbers won’t have the same bargaining power to influence policy as some previous smaller coalition partners may have had.  Against this backdrop, it’s safe to assume that the next Programme for Government will largely, if not entirely, be dictated by the policy priorities set out by Fianna Fáil and Fine Gael in their general election manifestos. So, what might this mean for small businesses?  Addressing the cost of doing business  In their respective pre-election pledges, both parties were keen to highlight their awareness of the rising costs of doing business. In Fianna Fáil’s case, they pledged to address this by establishing a new “Cost of Business Advisory Forum” to conduct a review of all current business costs and taxes.  According to the party’s manifesto, “this forum will be consulted before introducing new legislation or policies that affect small businesses.”  Likewise, in its manifesto, Fine Gael took a similar tack by reasserting its commitment to apply what it calls the “SME test” to any new legislation coming down the track – a test that would essentially require all departments to first assess the impact on small businesses of any new measures being proposed prior to enactment.  So, with both parties essentially singing from the same hymn sheet on the issue, it is likely that we will see the announcement of some sort of new initiative designed to limit the amount of new regulations that could further add to the cost burdens of small businesses.   Employers’ PRSI   Again on the issue of reducing business costs, both parties also made specific commitments to reduce the Employers’ PRSI burden where lower earning workers are employed.  While Fine Gael favoured a temporary, three-year PRSI rebate based on the number of lower-earning workers on a company’s payroll, Fianna Fáil pledged an outright reduction to the lower rate of employers PRSI by 1.5 percent.  The logic behind the latter proposal (we know this because the Institute’s pre-election manifesto originally proposed it) is to mitigate the concurrent 1.5 percent uptick in payroll costs due to hit many employers in late 2025 through the introduction of pensions auto-enrolment.  So again, with both parties essentially aligned here, it’s fair to say that a reduction or rebate of the lower rate of Employers’ PRSI in some format will also likely feature in the next Programme for Government.   VAT on hospitality  The issue of VAT on hospitality was a notably contentious issue in the run up to Budget 2024 with the Government ultimately refusing to reinstate the reduced nine percent rate despite extensive lobbying from the sector.  However, the way in which each party subsequently approached the issue in their election manifestos is perhaps telling of a policy fissure between the two.  Fine Gael clearly favours a reduction, albeit to a midway rate of 11 percent while Fianna Fáil is notably silent on the issue in its manifesto, instead placing its focus on maintaining VAT on gas and electricity bills at nine percent for the next five years.  How this difference in approach will ultimately play out in the final Programme for Government is as yet unclear. However, Fine Gael’s pledge to implement a reduction will no doubt have created an expectation from the hospitality sector that some sort of action will be taken on reducing the rate.  Energy supports  High energy costs continue to be an issue for many small businesses and the manifestos of both Fianna Fáil and Fine Gael have again sought to tackle this through further one-off grant schemes.  In Fianna Fáil’s case, the party has pledged to introduce a successor to the Increased Cost of Business/Power Up grant schemes to help hospitality and retail businesses deal with higher energy bills.  Likewise, Fine Gael has promised a new energy cost grant scheme, “to help businesses lower their energy costs, enabling them to operate more sustainably.” Given that the two parties appear to be broadly aligned on the issue, a new round of temporary energy support grants seems likely.  However, what is less clear is how the announcement of these relatively piecemeal measures will be received by businesses, particularly given the slow uptake of previous such schemes over the past two years. Stephen Lowry is Head of Public Policy at Chartered Accountants Ireland

As anticipation for an early general election continues to grow, the Institute’s public policy team has made submissions to all of the main political parties setting out the key policy priorities we would like to see featured in any future Programme for Government. Supporting small businesses While the Government has acknowledged the financial pressures SMEs are under, many businesses remain constrained by rising labour costs. In a recent survey of our members, 90 percent of respondents identified labour costs as being the single biggest operating cost facing their business today with over 90 percent saying that these have increased over the past year. With this in mind, we are calling for the next Government to: 1. Reduce Employers’ PRSI on minimum wage workers by 1.5 percent to mitigate the cost of auto-enrolment for employers Currently employers’ PRSI is paid at a rate of 8.8 percent (8.9 percent from October 2024) and a reduction by 1.5 percent would cost the Exchequer an estimated €63 million in a full year. This proposal would compensate employers who will have to introduce pensions auto-enrolment during 2025 at an initial cost of 1.5 percent. The cohort most impacted by the new pensions scheme will be the estimated 164,000 minimum wage workers. 2. Think small first when it comes to introducing new legislation and regulations SMEs have also had to deal with the introduction of an unprecedented number of new legislative requirements over the past 2 years, adding to their cost and administrative burden.  One example is the introduction of enhanced reporting for employers meaning that employers have to report in real-time details of tax-free travel and subsistence and other benefits paid to employees.  Government needs to be cognisant of these challenges when implementing new regulations and have regard to the timing and suitability of same. It is important that small companies do not face any unnecessary or disproportionate regulatory obstacles to start up, establish and grow.  This can be achieved by: Strictly applying the ‘enhanced SME test’ across all government departments when introducing new legislation that will ultimately affect the bottom lines of SMEs. Staggering the roll out of new workplace legislation in a timely manner so as not to overburden employers with additional new costs all at the same time. Facilitating consultation and dialogue with SMEs and other impacted stakeholder groups before introducing new legislation or policy that affects small businesses. Reducing the frequency of reporting the payment of travel and subsistence and other benefits to a monthly or annual basis. 3. Simplify the tax regime for SMEs to encourage enterprise and innovation It is acknowledged that businesses face a complex challenge in accessing tax reliefs and schemes and the Government has shown a desire for all businesses, especially SMEs, to know what they are entitled to claim and can access all appropriate schemes and reliefs.   However, there are several areas where improvements must be made including: (i) Making share-remuneration more attractive by: Maintaining the Employers’ PRSI exemption, which offsets some of the cost of establishing share schemes. Deferring all tax charges for the employee until a sale or liquidity event occurs and allowing CGT treatment on a redemption of employee-owned shares. Enhancing the Key Employee Engagement Programme (KEEP) scheme by relaxing some of the onerous conditions for establishment which drives set-up costs. (ii) Encouraging SMEs to claim the R&D tax credit Larger organisations represent a larger proportion of the amount of R&D tax credit claims in a year. Smaller organisations are disincentivised from claiming an otherwise-available R&D tax credit on the basis of a lack of certainty, fundamental tax risk, and burdensome scrutiny of claims. This can be achieved by: Offering an enhanced rate for small and micro companies of 50 percent. Simplifying the documentation and qualification requirements for SMEs. Introducing a Revenue pre-clearance system for first time claimants. Improving Revenue guidance targeted at SMEs and including a list of common pitfalls encountered by claimants. (iii) Reduce Capital Gains Tax from 33 percent to 25 percent Investment is critical in enabling start-ups to thrive and SMEs to grow and expand.  A lower rate of CGT has been shown to encourage innovation and risk taking. It encourages the sale and purchase of assets, which drives investment activity. This would improve returns for entrepreneurs and in turn the Exchequer.  Improving childcare capacity and affordability for working parents Childcare provision is part of the critical infrastructure necessary for a functioning economy. Access to affordable and good-quality childcare can play a key role in driving more sustainable and inclusive economic growth. In a survey of our members published earlier this year, 97 percent of respondents surveyed said that they had considered adjusting their working patterns as a result of not being able to find a childcare place while almost half of respondents signalled that they have had to reduce their working hours as a result of this. From a cost perspective, one third of members currently pay up to €1,000 a month per child on childcare with one third paying between €1,000 and €2,000 per child per month. This is not a sustainable situation. To address these issues, we are calling on the next Government to: 1. Commit to a whole-of-government strategy which recognises childcare as part of the critical infrastructure necessary for the functioning of the economy. This strategy should: Focus on encouraging the availability of flexible or part-time childcare places to reflect current work patterns. Targeted funding could be directed at facilities to offer more flexible offerings. Ensure adequate capacity in the sector by officially analysing and documenting childcare needs in local areas on a regular basis.  Expand the work of the Access and Inclusion Model (AIM) programme which caters for children with a disability by creating a more inclusive environment in pre-schools through universal and targeted supports. 2. Ensure funding of the existing system reflects the true cost of service provision and encourages growth in the sector. This can be achieved by: Regularly reviewing Core Funding to ensure that the model is suitable for the sector and enables providers to be sustainable, profitable and retain an ability to invest in their own services. Supporting an integrated system of full time and after-school care with both types of care adequately funded. Reflecting the additional cost burden placed on providers by the administrative requirements of Core Funding, the administration of the National Childcare Subsidies as well as the enhanced regulation experienced by childcare providers (and SMEs generally) by the introduction of new labour laws including pensions auto-enrolment, which is expected in 2025.   3. Enhance awareness of support subsidies available to parents under the National Childcare Scheme. This can be achieved by: Ensuring that maternity hospital and Public Health Nurses to provide information on the supports available to new parents in the early years. Requiring childcare providers to highlight available supports to parents as part of the application process to register their child with the childcare facility. Translating the NCS portal into other languages as language barriers have been reported as being a barrier to claiming the subsidy. As part of our pre-election campaign to promote the above advocacy agenda, in recent weeks representatives from the Institute have met with Minister for Enterprise, Trade and Employment Peter Burke and Minister for Finance Jack Chambers. In addition, we have engaged with senior officials at the Department of Children, Equality, Disability, Integration and Youth and have arranged forthcoming meetings with spokespeople from all of the main opposition parties. As we approach the next general election, the Institute’s public policy team will continue to advocate for our members interests across the political spectrum. Should you have any questions on our campaign or wish to bring a specific issue to our attention, please contact the public policy team at publicpolicy@charteredaccountants.ie  

Last week, a delegation from the Institute, under the auspices of the CCAB-I, met the Minister for Finance, Jack Chambers TD to discuss this year’s Pre-Budget 2025 submission. The Minister was joined by several key senior officials from his department who facilitated an engaging and thorough discussion on a number of our proposals. We raised our concerns over the increased cost of doing business for SMEs in particular, the potential to reduce Employers' PRSI and reducing the headline rate of CGT from 33 percent to 25 percent. We also raised concerns about capacity and adequate childcare, and how the lack of affordable childcare is impacting workers. In addition, we reiterated many of our recommendations for enhancing share-based remuneration, particularly for SMEs, including recommending a deferral of the upfront tax charge on unapproved share options and a safe harbour for valuations for private companies instituting share schemes. We discussed the impact of the new Enhanced Reporting Requirements on businesses and the ongoing question about the need for businesses to report in real-time or, or before in-scope payments are made to employees. The requirement to file on a real-time basis does not seem to add any integrity to the information reported to Revenue but has caused significant problems for affected businesses and workers. We also suggested that two-gift limit applying to the small benefit exemption should be removed with the only limit being by reference to the total value of non-cash benefits made in a year, i.e. a taxpayer should be entitled to receive any number of non-cash benefits up to €1,000 as long as those benefits are not part of a salary sacrifice arrangement. The Institute is grateful to Minister Chambers for taking time to meet with us and consider our proposals. We wish the Minister every success in his new role and look forward to continued engagement with him and his office.

Today, 27 June is Micro, Small and Medium Enterprises Day – a day designated by the United Nations to highlight the potential of micro, small and medium-sized enterprises (MSME) to transform economies, foster job creation and promote equitable economic growth. According to the UN, they account for 90% of businesses, 60 to 70% of employment and 50% of GDP worldwide. They are the backbone of societies everywhere, and in 2024, the UN has prioritised leveraging their power and resilience to accelerate sustainable development and eradicate poverty. To effect change, wherever they operate, businesses need policies that support and nurture the important role that they play in our economies. Supporting and promoting the interests and needs of small businesses across the island of Ireland is a key priority for the Institute in the coming year under the leadership of recently elected President Barry Doyle. SMEs are the backbone of the domestic economy and in the run up to the next general election in Ireland, the Institute is determined to amplify the voice of the small business community in our representations to Government. Our 2024 Survey of Small Businesses remains open and we invite all members working in the SME sector to share their views with us to help inform the basis of this important campaign. We look forward to sharing more details of our campaign on your behalf in the coming weeks.

A critical marker of Ireland’s future economic success will be supporting our SME sector by reducing the cost and complexity of doing business. This is according to the Consultative Committee of Accountancy Bodies- Ireland (CCAB-I), the umbrella group which represents some 40,000 professional accountants, as it published its Pre-Budget 2025 submission today. The paper entitled ‘Supporting and Sustaining our SME sector’ highlights the constraints experienced by SMEs as a result of increasing labour costs and also states that a lack of supply of housing and childcare places, in addition to high personal tax rates, are making it increasingly difficult for people to live and work affordably in Ireland.     The submission identifies four key areas for budgetary focus:   Support SMEs by exempting minimum wage workers from employers’ PRSI and simplifying tax legislation  Increase the number of childcare places available and offer working parents a €1,000 tax credit to return to the workforce Introduce a 30% intermediate rate of income tax to retain and attract workers and help people live affordably  Continue to stimulate and support the completion of new houses.  Commenting, Director of Public Affairs, Cróna Clohisey said  “The lead into Budget 2025 comes at a time of increased financial pressure for businesses operating in Ireland as well as clear deficits in infrastructure. Small businesses, which includes many family businesses, are being constrained by rising costs and, for many, labour costs now make up a considerable proportion of business expenditure. That is why we are asking the government to exempt minimum wage workers from Employers’ PRSI, this would save businesses labour costs of between 8.8 and 11.05%.”  The CCAB-I also believes that Ireland’s tax code has become increasingly complex in recent years and is calling for simplification of the tax rules to support businesses, enable them to grow and also ensure that Ireland remains competitive on an international stage.     Ms Clohisey continues  “For SMEs, the message we are receiving is that simplifying the tax code both legislatively and administratively, must be a priority. 70% of people working in the business economy in Ireland are employed by SMEs. The Government must move tax policy in a direction which supports the indigenous Irish economy by encouraging innovation and supporting entrepreneurs and reducing the cost and complexity of doing business.”  Childcare  In terms of childcare, the submission includes measures to improve the supply of childcare places for pre-school children. To address the impact of working parents leaving the workforce following the birth of their children on the labour supply, the CCAB-I is calling for the introduction of a €1,000 tax credit for working parents to encourage them to return to the workforce.  Ms Clohisey continues  “We know from research among our members that some working parents are unable to participate fully in the economy due to difficulties in obtaining and affording a place in a childcare setting. As a result, almost half of those surveyed have reduced their working hours to meet childcare responsibilities. We are asking that the government plans for adequate capacity in the sector by analysing local needs and ensuring adequate funding for the sector. For parents, the cost of childcare or lack of availability should not act as a disincentive to return to work. We are proposing as a starting point a €1,000 annual tax credit for working parents who return to or remain in the workforce until the child reaches primary school going age." Reforming the income tax system Ireland’s 40% tax rate is high in comparison to other competitor countries and the CCAB-I believes that introducing a third rate of income tax of 30% would make the system more equitable. It would also enhance Ireland’s attractiveness as a place to work, particularly among younger workers.   Ms Clohisey continues “Workers in Ireland pay income tax at a rate of 40% once they earn €42,000. This entry point is below the average wage and is significantly lower than most countries across the UK and Europe where incidentally having more than two tax rates is extremely common.   “Speaking on behalf of a mobile profession where most are in the early stages of their careers and are planning their futures, introducing an intermediate 30% rate would make the system more attractive and more equitable, lessening the tax burden on workers and putting more money in their pockets. The government needs to take immediate action to address the inequities that clearly exist within the system.”  Housing  In terms of housing, the submission also proposes: Extending the Help-to-Buy Scheme by two years to 31 December 2027 Abolish vacant homes tax Increase the rent-a-room relief from €14,000 to €20,000 and removing the cliff-edge Abolishing the non-resident landlord withholding tax system. ENDS  Issued by Chartered Accountants Ireland on behalf of the Consultative Committee of Accountancy Bodies – Ireland (CCAB-I). Read the submission in full here.  

Following constructive engagement with Government departments, the Institute has secured a change which should make the process of hiring non-EEA accountants by way of a Critical Skills Employment Permit (CSEP) less burdensome. In recent months, member firms have reported to us a significant increase in the need to apply for bridging CSEP visas for their workers while their residency status is being processed.  New rules announced this week should substantially reduce this requirement. CSEP’s are valid for a period of two years, after which employees holding this permit can typically go on to apply for continued residence in Ireland under what is known as a Stamp 4. Since November 2023, in order to secure a Stamp 4, the holder of a CSEP was required to complete a minimum of 21-months' work following the issuance of a Stamp 1 (a permission to work visa). Delays in issuing a Stamp 1 meant that member firms have had to apply for bridging CSEPs because the 2-year CSEP would expire before accountants could meet the 21-month work requirement. Amplifying our members concerns, we called for a reinstatement of the previous system whereby a Stamp 4 could be secured 21 months from the commencement of employment in the State - rather than from the commencement of a Stamp 1. Following a sustained period of engagement with department officials, this suggestion was formally adopted by the Department of Justice with immediate effect – details of the changes can be found here. Chartered accountants are currently listed on the Government’s Critical Skills Occupations List – meaning that due to capacity shortages in the industry, suitable candidates from non-EEA jurisdictions are eligible to apply for a Critical Skills Employment Permit (CSEP) to come and work in the profession here. The Department of Enterprise, Trade and Employment and the Department of Justice have jurisdiction over the issuance of CSEP’s and Stamp 4 residence permits. Further information on CSEPs can be found here on gov.ie. The previous changes announced by the Department of Enterprise, Trade and Employment (DETE) on November 15 2023 can be found here. Should you have an issue which you would like to bring to the attention of the public policy team, please reach out via our email publicpolicy@charteredaccountants.ie

Chartered Accountants Ireland has today outlined a series of concrete steps aimed at making the provision of childcare across the island of Ireland work for both providers and parents, which could leave working parents up to €4,500 a year better off and free up vital working capacity in the economy. Last month, the Institute published data underscoring the challenge that the costs and availability of childcare is presenting to businesses and working parents.  Today, its paper ‘Supporting Working Parents – The case for better childcare policy’ sets out the core economic arguments for improved childcare provision as well as shining a light on the experiences of working parents seeking childcare.  Currently places for children with unregistered childminders do not attract the same National Childcare Scheme (NCS) funding for parents as creche places, which are highly limited and often difficult to secure. This means a mother-of-two on an average annual wage of €45,000, and paying €24,000 per year for childcare, is left with just €235 per week after paying taxes and childcare fees – an amount which makes returning to the workforce a difficult economic proposition. Expediting the Government’s plans to enable parents who use childminders that are not registered with Tusla to access the NCS would give parents of up to 80,000 children easier access to subsidised childcare. Commenting, Tax & Public Policy Lead, Chartered Accountants Ireland, Cróna Clohisey said  “We know what the challenges are for providers and parents and we welcome the upcoming increases to NCS subsidies. But as a mother of two young children, I’ve seen first-hand the difficulties in securing creche places, the scramble to find a childminder, and the quest to make full-time employment viable for parents. The policy tools to address these are already largely in place, so it is time to move to solutions mode. “Implementation and awareness are the two major hurdles that need to be overcome, and bolder interventions are now required if effective change is to be achieved in the childcare space. That is where we are now focusing our attention in our proposals to the Government.”  Chartered Accountants Ireland is calling on the Government to: Expedite plans to enable parents who use childminders that are not registered with Tusla, to access the National Childcare Scheme, giving parents of up to 80,000 children easier access to subsidised childcare. Streamline Core Funding. The introduction of Core Funding represented a new and different way of providing funding to the sector, but it could be greatly streamlined by: Increase funding, capital investment and grant support to the sector to more adequately reflect the true cost of providing childcare services. Importantly, these funding levels should not be static but regularly reviewed and updated in line with economic and inflationary changes. Increase awareness: engagement across the Institute’s membership has pointed to a lack of awareness of supports already in place. The Institute is calling on the government to launch an improved campaign of awareness to working parents that is integrated into and promoted by the public health system. Commenting, President of Chartered Accountants Ireland, Sinead Donovan said  “Allowing childcare challenges to persist constricts labour market capacity, narrows the tax base through lower labour market participation, and maintains the gender pay gap by making it more difficult for parents, proven to be predominantly women, to return to the workforce full time. This is a generational issue, it’s hitting men and women in different but equally real ways. “Currently, Chartered Accountants Ireland members are being asked to vote on a proposal to amalgamate with CPA Ireland which, if passed, would create the largest single accountancy body on the island of Ireland. Issues such as childcare can only truly be solved through a whole-of-government strategy, which is why a single, strong voice for the profession will be crucial in the years to come.” ENDS  Notes to editors Chartered Accountants Ireland’s paper, Supporting Working Parents – The case for better childcare policy, will be published on the Chartered Accountants website on Tuesday 13 February. Chartered Accountants Ireland members are currently being asked to vote on a proposal to amalgamate with CPA Ireland which, if passed, would create the largest single accountancy body on the island of Ireland. An online vote closes at 1pm on Wednesday 14 February with a final, in-person opportunity to vote at the Chartered Accountants Ireland SGM on Wednesday 21 February. More information on the proposal and how to vote is available on the Chartered Accountants Ireland website.

Chartered Accountants Ireland has outlined a series of concrete steps aimed at making the provision of childcare across the island of Ireland work for both providers and parents, which could leave working parents financially better off and free up vital working capacity in the economy. Our paper ‘Supporting Working Parents – The case for better childcare policy’ sets out the core economic arguments for improved childcare provision as well as shining a light on the experiences of working parents seeking childcare.