BUDGET 2021 – What You Need to Know

As the Government borrows to meet the cost of the COVID-19 pandemic and Brexit, here is a quick summary of the main points:

Tax

There have been no major changes to personal taxation on income.

• No changes to income tax, USC or PRSI rates, but the ceiling of the second USC band will be increased from €20,484 to €20,687 to support those on minimum wage. PRSI will be increased from €394 to €398.
• There were very limited tax measures announced – €270m in the context of an overall budgetary package of €17.75 billion. A few tax measures introduced to deal with the impact of Covid-19 on certain sectors of the economy.
• The dependent relative tax credit will increase from €70 to €245.
• Stamp Duty Scheme, which refunds a portion of stamp duty paid on acquisition of non-residential land where it is then developed, will be extended until the end of December 2022.
• An extension of Stamp Duty Relief for the transfer of agricultural land to family members until December 2023.
• No change to the 12.5% of Corporation Tax
• Change to Capital Gains Tax Entrepreneur Relief so that anyone who has owned at least 5% of the shares for continuous three years will qualify for relief.
• Carbon tax will be increased by €7.50 per tonne next year, from €26 to €33.50 per tonne. This kicks in on budget day for auto fuels and then will be applied to all other fuels from 1 May next year.
• Changes to the Vehicle Registration Tax bands based on emissions to incentivise people to buy low emission cars.
• 2019 Income Tax and 2020 Preliminary Tax for self employed can be ‘’warehoused’’ until 2021 if Income Tax Return is filed by December 10^th 2020  

Business Supports

• There will be a new scheme of targeted support for businesses significantly affected by Level 3 or higher restrictions. The Government will make a payment based on 2019 average weekly turnover and it will be effective until 31 March 2021, with a maximum payment of €5,000 per week.
• Commercial rates will be waived for the remainder of 2020.
• There will be an extension of the Tax Warehousing Scheme for employers to include those on Temporary Wage Subsidy Scheme – the self-employed can also benefit from this.
• TWSS amounts owed back to Revenue can also be “warehoused”.
• The VAT rate for the hospitality sector will drop from 13.5% to 9% with effect from 1 November this year until December 2021.
• €55 million for a tourism business support scheme and €5 million for tourism product development.
• Local Authority rates waiver has been extended to the final quarter of 2020
• Working from home:If an employer makes no contribution, workers can claim a tax deduction for things such as heat, light and broadband

Welfare Supports

• No change to main benefit rates, but the payment that families in receipt of a weekly benefit receive for children will increase by €2 per week for children under 12 and by €5 per week for children over 12.
• The pension age will stay at 66.
• Self-employed recipients of the Pandemic Unemployment Payment will be able to earn up to €480 per month without losing their payment. The government has indicated this will come into effect “very quickly”.
• Illness benefit will now be available after three days out of work, rather than six.
• The one-week Christmas bonus will be given this year to people on a welfare payment for four months up to December, including those in receipt of PUP.

Click Here to Download the Key Tax Measures Summary – Budget 2021

If you need to find out more about how your business is affected by Budget 2021, then contact us today at: 01 663 2000