Forecasting what turn Brexit is going to take next, remains extremely difficult – when so much remains unknown. However, the possibility of a no deal Brexit remains very likely outcome, even considering the most recent extension in departure date from 29th March to 12th April. Below are some scenarios that could occur in the coming weeks.
Mrs May Resigns
A no-deal Brexit could be delayed if Theresa May was ousted as prime minister. The EU would accept a request for a further delay in such a situation. Albeit the existing problems regarding Brexit would remain. The EU have insisted that they will not renegotiate Mrs May’s withdrawal agreement.
Article 50 Withdrawn
The petition asking the British Government to revoke Article 50 has received over 5.3 million signatures as at 11 pm Sunday 24th March. This petition included with 1 million people marching on parliament requesting a second referendum. It remains unlikely that this pressure will result in a second referendum.
Mrs May Enforces Exit Without a Deal
If Mrs May manages to hang on in Downing Street, the Prime Minister could force a no deal exit if she so wishes. The UK parliament has not taken no-deal off the table.
Customs Union with EU
A customs union with the EU is the most promising alternative to Mrs May deal. It would only require moderate changes to the political declaration. There is however a significant risk of the second referendum supporters refusing to accept a customs union as a compromise.
No Option – Including Customs Union
This is the most likely of the scenarios. This option could receive backing in the House of Commons. The Prime Minster goes back to EU without a plan. EU27 subsequently refuse to grant any more delays. Thus, triggering a hard Brexit.
ESRI Report on impact of Brexit on Irish economy
The ESRI have studied 3 scenarios on Brexit an estimate that in a hard Brexit scenario the Irish economy could contract by as much as 5% over 10 years, while employment would be 3.4% lower over that same period or 77,500 fewer jobs. This disorderly scenario would also mean real wages would decrease by 1.4% relative to consumption.
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With Brexit, international market and general economic risks looming the role of the Irish entrepreneur is more important than ever to maintain Ireland’s economy.
As Irish entrepreneurs invest the economy grows, employment numbers are maintained and increased, and the driver of Irish economic activity is diversified to compliment multinational investors.
When entrepreneurs invest they take commercial risk motivated in part by the financial reward that follows business success. The Irish CGT rate is 33% and such a high CGT rate can discourage investment by entrepreneurs.
The special entrepreneurs CGT rate of 10% partly addresses this but has two key downsides:
This compares with the UK relief which applies to gains up to €10M.
It makes sense to encourage investment in business of scale and to invest in more than one business. Entrepreneurs will be watching Budget 2019 closely.
If the limit on the relief is increased closer to the UK limit of €10M and the full time working relief requirement can be relaxed there will be more reason than ever for Irish entrepreneurs to invest with the benefit that brings to the Irish economy and employment.
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From the 7th of April 2009 the tax relief for landlords on mortgage interest paid on debt used to purchase, improve or repair a residential property has been restricted to 75% of the interest incurred in the year. With effect from 1 January 2017 the amount restricted increases to 80%.
The restriction will increase by 5% every subsequent year until the full 100% of interest incurred is allowable. Landlords will therefore be entitled to a full interest deduction with effect from 1 January 2021.
For landlords renting properties to tenants availing of Housing Assistance Payment (HAP) scheme, 100% of the mortgage interest can be claimed on condition that an undertaking is given that the property be rented to HAP tenants for at least 3 years. Mortgage interest is claimed, subject to the above restrictions, in the first 3 years of the tenancy. The balance up to 100% of the relief can be claimed by the landlord in the year following the expiration of the three-year tenancy.
Landlords should note that the availability of the interest deduction is still dependent on the tenancies being registered with the Residential Tenancies Board.
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