The Key Points from Budget 2021
· 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.
§ 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).
· 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.
· 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.
· 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.
· 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.
· 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.
· 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.
· 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.
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Timothy Kelliher & Company Limited
Phone: +353 (0) 64 6632105