The Key Points from Budget 2021

Income Tax

· There will be no changes to income tax rates or bands.

· The Dependent Relatives’ Tax Credit will be increased from €70 to €245.

· The Earned Income Tax Credit for Self Employed will be increased by €150 to €1,650.

· The second band of the Universal Social Charge will be increased by €203 from €20,484 to €20,687.

· The weekly threshold for the higher rate of employees’ Prsi will increase from €394 to €398 per week.

· The Help to buy (HTB) scheme will be extended until December 2021.

· Where the employer doesn’t make a contribution, employees working from home may be able to claim a tax deduction for utility costs and this will include broadband costs from 2020, and other vouched expenses wholly & exclusively required in the performance of their work.

Corporation Tax

§ The main Corporation Tax rate will be unchanged at 12.5%.

§ There will be a two-year extension until December 2022 of the Knowledge Development Box. The Knowledge Development Box is a corporation tax relief on profits earned by an Irish company on patented inventions and copyrighted software to the extent relates to R&D.

§ Work will begin on the development of a tax credit for the digital gaming sector with a view to commencing it in January 2022. This credit is intended to support the established film and animation sector in Ireland.

§ The Accelerated Capital Allowance scheme for energy efficient equipment will be extended for three years (to end 2023).

Vat

· The Vat rate applicable to the hospitality & tourism sector will be reduced from 13.5% to 9%, with effect from the 1st November 2020 until the end of 2021.

· The temporary reduction in the standard rate of Vat to 21% will continue until the 28th February 2021.

· There will be an increase in the Farmer’s Flat Rate Addition from 5.4% to 5.6%.

· There are no other changes to Vat rates.

Stamp Duty

· The Consanguinity (stamp duty) Relief will be extended until the end of 2023.

· The Consolidated Farms (stamp duty) Relief is continued until 2022.

· The Stamp Duty Residential Development Refund Scheme will be extended by three years.

Capital Taxes

· The share holding requirement under the Capital Gains Tax (CGT) entrepreneurial relief will be changed so that a person who has owned at least 5% of the shares for a continuous period of any three years now qualifies for the relief.

Excise Duties

· The price of 20 cigarettes will increase by 50 cents, with pro rata increases on other tobacco products, from midnight tonight.

· Carbon tax will be increased by €7.50 per tonne/CO2 on auto fuels from tonight and all other fuels from the 1st May 2021. This means that the price of petrol & diesel will increase from midnight tonight in line with these carbon tax increases.

· Motor tax on pre-2008 cars taxed on engine size will see no change but higher emitting cars registered post 2008 will see annual motor tax increases.

· VRT Reliefs for plug-in hybrid electric vehicles and hybrid vehicles will be allowed to expire and relief for battery electric vehicles to be tapered.

Business Supports

· There will be a new ‘Covid Restrictions Support Scheme (CRSS)’ introduced from today until the 31st March 2021 to help businesses significantly impacted or closed by Covid-19 restrictions. This scheme will only operate when level 3 restrictions (or higher) are in place and will cease when those restrictions are lifted. Qualifying businesses will receive a payment from the Revenue based on their 2019 average weekly turnover, which will be calculated on the basis of 10% of the first €1m in turnover and 5% thereafter, subject to a maximum weekly payment of €5,000. Qualifying businesses will have to demonstrate that their turnover does not exceed 20% of their turnover for the corresponding period in 2019.

· The commercial rates waiver in place will be extended to the end of 2020.

· The Employment Wage Subsidy Scheme (EWSS), due to continue until the 31st March 2021, is expected to continue in a similar form (or another similar type scheme) until the end of 2021.

· The Revenue Tax Warehousing Scheme will be extended to include repayment of TWSS funds owed by employers.

· The Revenue Debt Warehousing Scheme will be extended to the Self-Employed who have suffered a significant drop in their income in 2020 and will struggle to pay their 2019 tax bills. This will allow the deferral of their 2019 income tax bill and/or their 2020 Preliminary tax payment for a year with no interest & surcharge applying and a 3% interest rate applying thereafter.

· For Self Employed Individuals in receipt of the Pandemic Unemployment Payment (PUP), there will be an earnings threshold of €480 per month to allow them to carry out intermittent work without losing their PUP entitlement.

Welfare

· There will be no increase in the state pension in 2021.

· The Christmas Bonus will be paid to all long-term social welfare recipients and jobseekers and will also be paid to Pandemic Unemployment Payment (PUP) recipients who remain out of work at the start of December.

· The planned rise in the pension age to 67 from the 1st January 2021 will not go ahead.

· The fuel allowance will increase by €3.50 per week.

· The living alone allowance will increase by €5.00 per week.

· The qualified child payment will increase by €5 for Over 12’s and by €2 for Under 12’s.

· The annual Carers Support Grant will be increased by €150.

· Parent’s benefit extended by a further 3 weeks.

Other

· The SUSI Fee Grant for postgraduate study will be increased by €1,500 with the income eligibility threshold increased to €54,240 from €31,500.

· The government has announced a recovery fund of 3.4 billion to stimulate the economy and employment in the aftermath of Covid-19 and Brexit. It will be accompanied by a €1.6 billion expenditure on capital programmes.

We hope you find this information useful and please feel free to share it. If you have any questions, feel free to contact us.

Timothy Kelliher & Company Limited

Chartered Accountants

Phone: +353 (0) 64 6632105

Email: info@timothykelliher.ie

Web: www.timothykelliher.ie

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Timothy Kelliher & Company Limited

4 Court Yard House,

Lewis Road,

Killarney,

County Kerry,

Ireland.

Email: info@timothykelliher.ie

Phone: +353 (0) 64 663 2105

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