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BANKRUPT NO MORE

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Recently, we discussed some proposed changes to bankruptcy terms in Ireland. We can now report that these legislative changes have been largely accepted by the government. These changes have been hailed as being one of the most positive changes to Irish bankruptcy law for the many people currently suffering from debt issues.

 

It has been reported recently that although these changes will be widely accepted, some minor changes may need to be made. As we previously stated, the main proposed change would be that the discharge term for bankruptcy is to be reduced from three years to one year. This would be a major change in Irish bankruptcy procedures and would allow for those individuals who have been made bankrupt to return to business far sooner than was previously possible.

 

An amendment has been suggested on the proposed document. It was originally stated that those who have been bankrupt for more than one year prior to legislation being passed would see their bankruptcy discharged after 3 months. It is suggested that the government may now amend this to six months. This will still allow for many people to have their bankruptcy period greatly shortened, and it is hoped we will then see many entrepreneurs surge back into the market.

 

Another major change to Irish bankruptcy proceedings is in relation to the seizure of family homes following bankruptcy. TD Willie Penrose who is the main driving force behind these changes has proposed in his bill that these properties must be sold within three years, or be returned.

 

There have been some whisperings of these changes making bankruptcy appear a more attractive option. IMHO Chief Executive David Hall has rubbished these claims stating that:

“Going bankrupt is a daunting process for anyone – subjecting yourself to having the knives and forks in your house counted by a third party to establish what asset value you have in your house.”

 

Indeed, the very idea of the word bankruptcy is an incredibly daunting notion for anyone to face. It is hoped, however that these new changes, whilst bringing Irish law into line with Northern Ireland and the UK, will also make the process somewhat less devastating. This perhaps will then assist in Irish recovery as we see some of our entrepreneurs and hard-working business owners who have fallen on hard times make a swifter return to business.

 

Once again, we hope that this clears up any confusion about the ongoing changes within bankruptcy law and procedures in Ireland. If you yourself are experiencing difficulty and would like to know more about the process, please don’t hesitate to give us a call here at DCA Accountants.

WHO YOU GONNA CALL? …BANKRUPTCY BUSTERS!

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Bankruptcy is not a word that fills anyone with a sense of glee, but sometimes it is the only option for both you and your business during hard times. As is often said in business, there certainly comes a time when it is best to cut your losses and move on. For many, this involves the necessity of filing for bankruptcy until such a time as your finances are once again in order. In the past, becoming bankrupt has often been a very stressful and arduous time. Fortunately, new reforms are set to be introduced which could change this process and make it a lot easier and about as pain free as it is possible for this task to be.

 

Taoiseach Enda Kenny has said that there will be reforms introduced which will reduce the period that an individual is bankrupt for from three years to one year. These reforms would require an amendment in the Personal Insolvency Act of 2015, a change which the Taoiseach is said to be strongly in favour of.

 

This amendment would bring Irish insolvency and bankruptcy procedures into line with those currently in practise in the UK and Northern Ireland. TD Willie Penrose has been a major driving force behind this proposed change stating that in his believe it is better that these people be allowed to return to making economic contributions after one year rather than being outside of the business world for three. Penrose states that these people could be entrepreneurs ready to re-enter the business world, but they cannot.

 

CEO of the Irish Mortgage Holders Organisation, David Hall has largely welcomed these proposed changes stating that:

“This development will be of huge benefit to those debtors who are seeking a fresh start and want to rid themselves of debt.”

 

Certainly, these changes will somewhat change the face of business in Ireland and allow more opportunity for change and the ability to move on at a faster pace from a period of business which may have been unsustainable for a great many reasons. As we have seen in the UK and Northern Ireland models of dealing with bankruptcy, this has not caused a great many extra financial issues and should be a good fit for the Irish system.

 

Whilst these new rules will make the process of applying for bankruptcy in Ireland somewhat less painful, it is advisable to seek professional assistance when doing so. Should you require any professional advice or guidance in a matter such as this please do not hesitate to contact us at DCA Accountants where we will be happy to assist and to guide you in the best direction for you and the brighter future of your business.

BUDGET 2016: WHAT DOES IT MEAN FOR SME’S AND THE SELF-EMPLOYED?

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It has been reported that SME’s now account for an enormous portion of all enterprise in Ireland. Unfortunately, SME’s and the self-employed rarely see their efforts being rewarded in any way when the time of the budget rolls around each year. Was the budget for 2016 any different? We have compiled some of the main changes that will affect both SME’s and the self-employed for your reference.

Self Employed Tax Credit               

 

It was announced in Budget 2016 that there would be a new earned income tax credit of €550 available for those who are self-employed, including farmers. Whilst this is still quite far behind the tax credits available to others, it is somewhat of a beginning for the process of not alienating the self-employed through taxation. It is suggested that this figure would be increased in future years.

Capital Gains Tax Reduction

 

There will also be a very welcome reduction in the Capital Gains Tax for 2016 for the self-employed and entrepreneurs. This reduction takes the tax from 33% to 20% on a gain up to €1 million, which could have significant positive consequences, despite still remaining quite far behind the UK and the North of Ireland in relation to this tax. The expenditure cap for Film Relief has also been increased to €70 million which is good news for this sector.

Farmers

 

Farming in particular was a sector which was more acknowledged in this budget than previous, as the general stock relief and the stamp duty exemption for young farmers was extended to 2018. It was also announced that a new succession transfer proposal would be put forward in order to increase certainty for the next generation of farmers and assist with a more long-term thinking that may not have been possible previously.

Microbreweries

 

Another sector of self-employment and SME’s that was newly acknowledged in Budget 2016 was the increasingly popular microbreweries. The excise relief for microbreweries will now be made available upfront. This is welcome news for the industry as it may help to free up some much needed cash flow which is always important for these SME’s.

In Conclusion

 

It is also hoped that the reintroduction of the Social Welfare Christmas Bonus of 75% will boost sales and income for SME’s, thus generating more revenue overall.

 

Unfortunately there have been few steps taken to support entrepreneurs in particular. Whilst these measures for the self-employed and SME’s in particular are small steps, at least these steps are finally being taken in the right direction and we would hope to see an end to the previous discrimination against these sector in future budgets, as SME’s begin to form the backbone of our modern economy.

KEY POINTS FROM BUDGET 2016

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As the country watched with baited breath for what was promised to be a more forgiving budget than the previous efforts, there has been some questions over how much these changes may change things on a personal and professional level. We have compiled some of the key points to note from Budget 2016 for your convenience.

  • USC entry point raised to €13,000
  • USC reductions:

2015                            2016

1.5%                            1%

3.5%                            3%

7%                               5.5%

  • All USC bands lowered on earnings up to €70,044 per annum.
  • Minimum Wage to be raised from €8.65 to €9.15.
  • There will now be an additional €550 tax credit available to all owners of SME’s (Small and Medium Enterprises).
  • Normal tax bands will remain unchanged.
  • Child Benefit will increase by €5 per month, taking the total to €140 per child.
  • State Pension to increase by €3 per week for pensioners and carers aged 66years and over.
  • There is to be an increase in the Inheritance Tax Band relating to transfers from parents to children. The tax band will now stand at €280,000.
  • Social Welfare Christmas Bonus restored to 75%.
  • Cost of a packet of 20 cigarettes to increase by 50cent (including VAT).
  • Free GP care for children is to be extended to all under 12’s.
  • Fathers to be entitled to 2 weeks paid paternity leave as of September next year.

If you have any queries or concerns about how budget 2016 will affect your finances, please don’t hesitate to contact us at DCA Accountants.

BUDGET 2016 TAX CHANGES BREAKDOWN

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Now that the highly anticipated and much talked about budget for 2016 has been announced, the one thing on everyone’s minds is “how will this affect me, am I really any better off now?” In the hope of clearing some of the most important topics of interest from the budget up for you, we have compiled a breakdown of the major changes in terms of tax.

Most changes are expected to come into effect on 1st January 2016.

Income Tax:

  • No changes in income tax announced for 2016.

PRSI for Employees:

  • There were some cuts to PRSI announced for lower paid workers announced in this budget. Employees earning between €19,552 and €21,355 can now access relief of up to €624 per year. There will also be some relief for those earning between €21,355 and €22,048.

PRSI for Employers:

  • Employers should also see a reduction in the cost PRSI as it was announced that the 8.5% rate would be made available to those who earn up to €19,552 which is an increase in threshold of over €1,000

Universal Social Charge (USC):

  • All bands reduced on all earnings up to €70,044.

2015                                        2016

1.5%                                        1%

3.5%                                        3%

7%                                           5.5%

  • Entry threshold for USC increased from €12,012 to €13,000.
  • Threshold for 3% rate widened to over €18,688 which is an increase of over €1000.
  • Threshold for 5.5% rate widened.

Tax Credit for the Self-Employed:

  • An earned income tax credit of €500 was introduced for those who are self-employed, farmers, and those business owners who are not eligible for a PAYE credit (which stands at €1,650) on their income.

Tax Credit for Home Carers:

  • The tax credit for home carers is to increase from €810 to €1,000.

Tax Increases on Products:

  • The only tax increase seen on products in Budget 2016 is a 50cent increase on a packet of 20 cigarettes. There was no sign of the proposed tax on sugar.

That’s it for our rundown of the main tax changes for Budget 2016, stay tuned for more updates and advice from us following on from these Budget announcements.

If you have any queries or concerns about how budget 2016 will affect your finances, please don’t hesitate tocontact us at DCA Accountants.

PENSION DEADLINES

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The Revenue Commissioners have recently extended the deadline for people in excess of current pension savings to notify them. It has become a standard practise in the current financial climate for the amount of pension funds an individual can accrue while availing of tax relief to be reduced.

 

Those above the new threshold can notify Revenue and receive a new personal fund threshold, reflecting the size their pension fund was on the date the lower limit was announced. This is to ensure that these individuals do not face a further tax bill.

 

In January 2014, the threshold fell from €2.3 million to €2 million, those with savings between these figures were given until July 2nd, 2015 to notify Revenue. Despite the deadline, it is thought that many people have not been in touch with Revenue and as such the deadline has now been extended to July 31st 2015.

If you have pension savings between €2million and €2.3 million you are encouraged to notify Revenue ASAP in order to avoid any further taxation on these amounts. It is unlikely that further extensions will be granted.

 

The deadline for staff in the public service to retire if their pensions are to be calculated on the higher salaries has also been extended in recent months. The new deadline will be July 2016. Minister for Public Expenditure and Reform, Brendan Howlin has said that the new deadline is intended “To minimise impacts on schools in particular.”

 

It is hoped that this extension will reduce the number of key managerial senior staff retiring en masse, which could lead to significant financial strain on schools in particular.

The Department has said that under the Haddington Road agreement, public service pay rates were reduced by 5.5% or more. “Retiring within the extension period will allow an affected public servant to benefit from superannuation calculated at the pre-cut pay level.”

 

If you are unsure about how these changes may affect you or you require any assistance with your own financial matters, please don’t hesitate to contact us here at DCA Accountants.

NEW FUNDING FOR IRISH CONSTRUCTION SECTOR

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A recent report has suggested that Sankaty, a well-known leading global credit specialist is now looking towards lending in Ireland. It was reported that Sankaty has been planning to raise up to $1 billion for a lending fund intending to target businesses that have found it difficult to gain funding in the wake of the recession – in particular, those in the construction sector.

 

Sankaty have teamed up with Irish financier Dermot Desmond to back a new venture called Broadhaven Credit Investments, which was officially set up on June 24th 2014. The venture is being fronted by Stewart Doyle and David Cullen and is backed by Sankaty London team.

 

Broadhaven has earmarked €200million to support house construction in Ireland, one of the sectors of Irish business which has been hit hardest by the financial crisis. The hope is that this extra funding may reduce the risk of another housing bubble, and by extension the consumer may see a reduction in the skyrocketing house prices. Broadhaven is prepared to support credible house builders in Ireland. Despite having its primary focus be on the construction sector, Broadhaven also intends to widen its gaze to the wider lending world by extending its funds to some Irish SMEs.

 

It is believed that while the initial seed capital for Broadhaven is estimated at €200million, there will be additional opportunities for this seed capital to grow exponentially over time. Sankaty has told potential investors in its new fund that the middle market presents an opportunity to earn “attractive risk-adjusted returns with significant premiums to the liquid credit markets. Structural changes in the global banking sector continue to constrain traditional lenders, leaving a supply and demand imbalance for middle-market financing.”

 

Since the company’s inception, Sankaty has invested over $7.5 billion in middle market investments and brings a debt-oriented approach to funding, and the move to the construction sector is an interesting one for such a huge company. Similarly, the move into this sector for such a well-known financier as Dermot Desmond may suggest that the long-suffering housing market in Ireland may indeed be about to pick up.

 

The funds being raised for this venture will have a six-year lifespan and offer funds over a three-year period. These funds may be an attractive prospect for you and your business. Should you require any assistance on how to manage your funds or repayments we here at DCA Accountants are here to offer you advice and assistance.

WHAT DOES THE IRISH TECH HUB MEAN FOR SMES?

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Despite the on-going issues caused by the economic downturn, Ireland has found itself becoming somewhat of a technology hub as we have seen a dramatic increase in the number of tech companies setting up shop in Ireland.

Companies like EBay, Microsoft, Facebook and Google already have bases in Dublin, paving the way for Ireland to become a technology powerhouse, leading to an increase in Irish job generation. The tech sector in Ireland has become an important job creator as we consistently see new companies seeking workers in Ireland.

Our tech sector shows that we have a young, skilled and vibrant workforce with a variety of marketable skills in the IT sector. Apple in the 80’s showed that we have skills in the manufacturing sector, which prompted other companies such as Microsoft to open up shop. These companies have since showed that we have skills in OS development and infrastructure that has now drawn in companies such as Google, Amazon, and eBay among others.

The question is; what does the existence of an Irish tech hub mean for smaller Irish start-ups?

The outlook for tech companies in general in Ireland is promising, and the existence of globally known multinational companies might intimidate smaller Irish tech start ups, but in reality as the tech world is constantly changing the floor is open for Irish tech SMEs as well as larger multinationals.

Small start-ups can get started as an offshoot of the larger ones, and the existence of the larger ones creates a tech economy that otherwise might not exist. Start-ups can also provide services to the bigger corporations. By the very nature of being small, they can come up with more innovative and cost effective ways to solve problems. Selling these problem-solving measures to larger companies ties them together and allows SMEs to grow alongside the larger.

As Ireland gains a name as a tech haven, it becomes an integral cornerstone of the Irish economy. Whilst the existence of globally recognised tech companies in Ireland might seem intimidating to your smaller start up, the reality for you and your company is that larger companies need smaller companies in order to thrive. Larger corporations need start-ups to either provide services or come up with innovative and cost effective products which increases competition and in turn increases the worth of the products themselves, creating a more valuable economy of tech in Ireland.