First published: October 10th 2023
Last updated: October 10th 2023
Before today’s Budget 2024 announcement, employment costs were the biggest concern for employers.
The Government appears conscious that its own measures are increasing employment costs at a time when energy costs, interest rates and inflation continue to impact both employers and employees.
With increases in minimum wage and statutory sick pay in the new year along with a forthcoming pension auto-enrolment scheme, the Government is aware that many of its recent measures are piling more costs onto business owners.
To address the business community’s concerns around rising employment costs, the Government has made a number of decisions in Budget 2024.
The key decisions from an employer and SME perspective are set out below…
€250 Million in funding available to SMEs
To address small to medium-sized business concerns around rising employment costs, the Government has allocated a €250 million package of temporary supports to help the SME sector.
Details of how these financial supports will be allocated are to be confirmed.
Funding for Regional Enterprise Development
The Government confirmed that €35 million in funding will also be made available for regional enterprise development.
This funding will be distributed through the Local Enterprise Office network, the Digital Services Coordinator and the IDA’s Regional Property Grants Programme.
Minimum wage increase
The Government has confirmed an increase to the minimum wage by €1.40 to €12.70 per hour.
This increase amounts to a 12% increase to the current rate of €11.30. The increase follows the recommendation of the Low Pay Commission to the Government earlier this year.
In terms of employment costs, it means minimum wage employees working 39 hours a week will now earn an additional €54.60 per week when the new rate kick in on 1 January 2024.
BIK on electric company cars
To encourage the use of electric vehicles for company car purposes, the Government has temporarily suspended the tapering of the preferential BIK relief.
For BIK purposes, the original market value of an electric vehicle will be reduced by €35,000 for 2024.
Income tax changes
To put more money in people’s pockets, the top rate of tax will now kick in at €42,000.
The personal, PAYE and earned income tax credits will also increase by €100 to €1,875.
The 2% rate of USC will now kick in at €25,760 instead of the existing €22,290.
In addition, the 4.5% rate of USC payable on salaries between €22,920.01 and €70,044 will also reduce to 4%.
These changes should all increase employee disposable income over the course of next year.
Mortgage Interest Relief
Mortgage-holders will be able to avail of tax relief of up to €1,250. This is thought to affect 165,000 mortgage holders.
Childcare costs to reduce by 25%
Childcare fees are to be cut by 25% next year although the reductions will not be in place until September 2024.
Families with an income of less than €100,000 will also have college fees for undergraduate students halved to €1,500.
In addition, there will also be a double payment of child benefit before Christmas.
Rent credit increase
The Renters’ Credit is set to rise to €750.
Energy bill credits
Like last year, there will be three energy credits paid to households. Three payments of €150 will be paid over the winter period.
Public transport fare changes
24 and 25-year-olds will become eligible for the Young Adult Card for the first time. The Young Adult Card allows half-price fares on public transport and with participating commercial operators.
The reduced public transport fees that are in place will remain unchanged for 2024.
What does Budget 2024 mean for your business?
There is a range of both business and personal financial supports available for the coming year. In short, these measures should free up more cash for Irish businesses who are battling increasing labour costs and incentivise people to work by enabling them to keep more of what they earn.
The Government has also moved to address the business community’s most pressing concerns around rising employment costs by confirming that there will be €250 million in business supports available to SMEs.
Financial support under this scheme may be available to your business to help offset the incoming increases to minimum wage, statutory sick pay and pension auto-enrolment.
Other personal financial supports should also put more money in your employees’ pockets. As an employer, we recommend familiarising yourself both with the personal supports available to employees as well as the financial supports your business can avail of.
With inflation and the cost of living remaining high, employers can show support for their employees by developing a financial wellbeing policy setting out how their business can provide financial assistance of any kind to employees.
Despite continuing global geopolitical unrest, the Irish economy continues to perform well and the labour market remains very competitive. As recruitment and retention remains an ongoing challenge for business owners, helping staff maximise their benefits under schemes like ‘bike-to-work’, the small benefit exemption, BIK and harnessing any applicable new cost-of-living measures will allow you to offer staff the most tax efficient and lucrative employment package.
Expert HR advice on developing a financial wellbeing policy
We know business owners don’t have time to develop employment contracts and documentation so why not call one of our HR experts to ensure your HR policies are up to date and useful for both staff and management.
For more information on a financial wellbeing policy for your business, call 1800 719 216 today.