The impact of Budget 2023

Extra support for employees

A key focus for this year’s budget is helping workers to see more money in their pockets.

The entry point for the higher tax band of 40% will be raised from €36,800 to €40,000. Plus, 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.

National minimum wage is also set to increase by 80 cent per hour from 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, to ensure that full-time workers on the minimum wage will remain outside the top rate of USC.

In addition, the annual limit for the Small Benefit Exemption scheme, which allows employers to provide limited non-cash benefits, rewards and vouchers to employees tax free, was raised from €500 to €1,000 and permits two vouchers to be granted by an employer in a single year. 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.

What does this mean for HR and payroll teams?

All these new announcements will require HR and payroll teams to make changes to their processes and systems. Payroll software will need to be updated to ensure compliance with the new rates and bands.

Some payroll software will be automatically updated in line with these measures, so it’s important payroll teams review what is part of their existing service and what changes they may need to implement themselves.

These new measures are designed to provide support for employees in line with rising inflation, and organisations need to ensure pay accuracy to avoid fines and further financial pressure on their employees.

Extra support for employers

A number of business support schemes were announced including a Growth and Sustainability Loan Scheme, and extensions will be applied to the Knowledge Development Box, the Key Employee Engagement Programme share option scheme, and the Special Assignee Relief Programme.

To try and alleviate pressure from rising energy costs, 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.

Through the JobsPlus subsidy, an incentive to encourage employers to employ jobseekers on the Live Register, employers will now be able to access the higher rate of payment (€10,000) when hiring candidates from disadvantaged and minority backgrounds.

There will be an increase in the staffing resources of the Workplace Relations Commission which may alleviate some of the backlogs experienced post COVID.

Extra support for learning and development

There will be €30 million in funding to increase capacity for apprenticeships in 2023, with over 4,800 additional places on industry led apprenticeships and 4,000 places on craft-based apprenticeship programmes. Underrepresented groups will be supported with a bursary.

Over 11,000 upskilling and reskilling opportunities are also being made available for those sectors most impact by Brexit. Over 2,000 Skillnet places have been announced in sustainable finance, green tech and climate change.

What does this mean for HR and payroll teams?

These new changes will require HR tams to re-evaluate their people processes, especially in relation to recruitment and learning. The JobsPlus subsidy extension offers a great opportunity for recruitment that may open up a range of diverse talent and support businesses struggling to fill roles.

With the range of apprenticeships and skills training announced, it’s a great opportunity for organisations to see where they can take advantage - whether you’re looking to upskill employees for succession planning or could benefit from attracting new talent through apprenticeships.

As Ireland’s economy struggles with the ongoing cost-of-living crisis alongside the rest of the world, this Budget aims to relieve some of the pressures organisations face with a range of measures that support business resilience.

Not sure your HR and payroll solutions are providing the right service to help you move forward in these uncertain times? At MHR, we do HR and payroll differently, and we’re happy to help you.