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BUDGET 2021 – What You Need to Know

BUDGET 2021 – What You Need to Know

9 Nov 2021

Budget 2021 was announced on 13th October 2020.

It has been described as the ‘budget of budgets’, the biggest budget in the history of the State, with the total value of support measures totalling a massive €17.75 billion – nearly eight-times last year’s budget plans.

However, the government is confident that we will build a more resilient Ireland. In the Minister’s words “Budget 2021 is a bridge to that better future”.

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.