We are pleased to bring you an update on Budget 2023 presented on 27 September 2022. Below we share a number of highlights relevant to the people profession from the vast array of measures announced.
A significant surge in tax revenue, particularly from corporation tax allowed Ministers Donohoe and McGrath to introduce cost of living measures worth €4.1 billion, along with budgetary measures for 2023 worth €6.9 billion.
The latest Department of Finance forecasts headline inflation of 8.5% for 2022, and just over 7% for 2023. There are more in the labour force in Ireland now than ever on record before, and the Government need to protect jobs to ensure we can sustain our recovery and growth. There was well over 2½ million people in employment in the second quarter and an unemployment rate of 4.3% in August 2022.
Employment and taxation
Workers will see more money in their pockets as the entry point for the higher tax band of 40% will be raised from €36,800 to €40,000, with proportionate increases for married couples and civil partners. In addition, the main tax credits (Personal, Employee and Earned Income Credit) were increased by €75, and the Home Carer Tax Credit by €100 to support stay at home parents.
The Minister confirmed that the national minimum wage will increase by 80 cent per hour on 1 January 2023. To go alongside this, the ceiling of the second Universal Social Charge (USC) rate band (2%) will be increased from €21,295 to €22,920, so as to ensure that full-time workers on the minimum wage will remain outside the top rate of USC.
There was an extension announced for the Small Benefit Exemption scheme that allows an employer to provide limited non-cash benefits, rewards, vouchers to their workers without the payment of income tax, PRSI and USC. The annual limit of the exemption was raised from €500 to €1,000 and permits two vouchers to be granted by an employer in a single year under this exemption. This is due to apply in the current tax year, so that an additional benefit can be paid in 2022 if an employer wishes to do so.
The JobsPlus subsidy, an incentive to encourage employers to employ jobseekers on the Live Register, is being extended. In the future employers will be able to access the higher rate of payment (€10,000) when hiring candidates from disadvantaged and minority backgrounds.
A number of business support schemes were announced such as a Growth and Sustainability Loan Scheme, and extensions will be applied to the Knowledge Development Box, the Key Employee Engagement Programme share option scheme, the Special Assignee Relief Programme, alongside a range of sectoral reliefs.
In an effort to alleviate the pressure from energy costs for businesses, a new Temporary Business Energy Support Scheme (TBESS) will assist businesses who have experienced an increase of more than 50% in the average unit price of power in 2022 than a year earlier. The scheme, to be administered by the Revenue Commissioners, will be capped at €10,000 per month and run until at least February 2023.
In an interesting move, vulnerable businesses in manufacturing and internationally traded services sectors which are suffering far reaching affects as a result of the war in Ukraine may be able to benefit from a new Ukraine Enterprise Crisis Scheme or state-backed Ukraine Credit Guarantee Scheme.
There will be an increase in the staffing resources of the Workplace Relations Commission which may alleviate some of the backlogs experienced post COVID.
Of particular note, was the reduction of VAT rates from 9% to 0% for non-oral hormone replacement and period products. This is a positive move in support of women in society and from a workplace outlook will support the agenda of #periodpositive and menopause awareness.
Minister McGrath announced significant increases in social welfare payments from January 2023, and a wide range of double payments and once-off payments in 2022 to address the cost-of-living crisis.
The maximum rate of all weekly social welfare payments will increase by €12 from January 2023 with proportional increases for qualified adults and people on reduced rates of payment. This increase applies to social insurance payments paid to employees such as Maternity, Paternity, Adoptive, Parents benefit as well as Illness, Health and Safety, Injury benefit and Carer's benefit. Where employers make a top-up payment (on top of the social welfare payment), the increase in Maternity, Paternity, Adoptive, Parents benefit, Illness benefit will result in a cost saving for employers of €12 per week per person receiving the benefit.
Education and skills
CIPD are pleased to see the further investment in education and apprenticeship programmes. There will be €30 million in funding to increase capacity for apprenticeship in 2023, over 4,800 additional places on industry led (consortia led) apprenticeships as well as 4,000 places on craft-based apprenticeship programmes. It’s good to hear that underrepresented groups will be supported with a bursary.
As the impact of Brexit is still being felt by business, the budget includes over 11,000 upskilling and reskilling opportunities for those sectors most impacted by Brexit and over 2,000 Skillnet places in sustainable finance, green tech and climate change.
CIPD hope that the childcare measures will make it easier for people to stay working while balancing their family’s needs. The renters’ tax credit will do little to alleviate the pressure on the incomes of those in rented accommodation, particularly those in the early stages of their careers. While significant investment is proposed to address the housing agenda, urgent progress is required to ease the pressure on workers, and hence employers, in relation to the availability and affordability of housing.
We welcome schemes which will ease the impact of energy costs on enterprise and encourage employers to hire more candidates from disadvantaged backgrounds. The extension of the 20% public transport costs reduction to end 2023 is welcome, along with the increased support for communities.
According to Mary Connaughton, Director CIPD Ireland
“We hope all of these measures will work in conjunction with the efforts of many employers around the country who already have been taking concerted steps to support their workforces as prices increase, and who themselves are having to cope with rising costs”.
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