A €550 tax credit is to be introduced for small business owners and the self employed as part of Budget 2016.

Minister for Finance Michael Noonan said the credit would help address a disparity in the current system, which means that pay-as-you-earn workers take home more of their salary than entrepreneur and small business owners.

He said this would be a first step to encourage the sector, which employs around 730,000 people across the country.

The Minister said he sees this measure as a first stop and further steps will be taken in future budges - as resources allow.

Mr Noonan also announced changes to Capital Gains Tax, which will see a reduced 20% rate apply to the whole or part disposal of a business up to the a limit of €1m.

He said this would make for a simplified system for those seeking to sell their businesses and he planned to extend the relief in its current form until the end of 2018.

He also said he would extend the three year tax relief for certain start-up companies until 2018. This relief supported 1,038 companies who employ 11,750 people at an estimated cost of €4.9m.