The Ministers for Finance and Public Expenditure & Reform, Pascal Donohoe and Michael McGrath presented their Budget speeches on Tuesday 12th October 2021, with Finance Bill 2021 due to be published on 21st October 2021. The following changes have been announced and are due to take effect from 1st January 2022, unless otherwise stated.
Income Tax and UCS
Tax Rates and SRCOPs
There have been no changes to tax rates for 2022. The standard rate will remain at 20% and the higher rate at 40%.
The SRCOPs for 2022 have been increased as follows.
|Single/Widowed Person or||First €35,300 @ 20%||First €36,800 @ 20%|
|Surviving Civil Partner||Balance @ 40%||Balance @ 40%|
|Qualifying for the Single Person||First €39,300 @ 20%||First €40,800 @ 20%|
|Child Carer Tax Credit||Balance @ 40%||Balance @ 40%|
|Married Couple or Civil||First €44,300 @ 20%||First €45,800 @ 20%|
|Partnership – One Income||Balance @ 40%||Balance @ 40%|
|Married Couple or Civil||First €44,300 @ 20%||First €45,800 @ 20%|
|Partnership – Two Incomes||Plus an amount equal to the lower income (subject to a maximum of €26,300)||Plus an amount equal to the lower income (subject to a maximum of €27,800)|
|Balance @ 40%||Balance @ 40%|
The SRCOP applicable under the Emergency Basis of tax will increase from €679 to €708 per week, from €1,358 to €1,416 per fortnight and from €2,942 to €3,067 per month.
Personal Tax Credits
The following changes to tax credits will apply:
Single/ Widowed Person or Surviving Civil Partner Tax Credit
The Single/Widowed Person or Surviving Civil Partner tax credit will be increased by €50 from €1,650 to €1,700.
Married Couple or Civil Partnership Tax Credit
The married couple or civil partner tax credit will be increased by €100 from €3,300 to €3,400.
Employee (PAYE) Tax Credit
The Employee (PAYE) tax credit will be increased by €50 from €1,650 to €1,700.
Earned Income Tax Credit
The Earned Income tax credit will be increased by €50 from €1,650 to €1,700.
Sea-Going Naval Personnel Tax Credit
This tax credit will be extended for 2022.
Universal Social Charge (USC)
There was no change to the USC exemption threshold of €13,000.
There has been no change to the rates of USC. The threshold for the 2% rate will be increased by €608 from €20,687 to €21,295.
For 2022, USC will apply at the following rates for those earning in excess of €13,000:
|Up to €12,012||0.5%|
Non PAYE income in excess of €100,000 will continue to be subject to a 3% USC surcharge.
Medical card holders and individuals aged 70 years and over whose aggregate income does not exceed €60,000 will continue to pay a maximum rate of 2% in 2022.
The rate of 8% USC will continue to apply under the Emergency Basis.
Employment Wage Subsidy Scheme (EWSS)
The EWSS will be extended until the end of April 2022 in a graduated form. The main points are as follows:
The current rates will be retained for October and November 2021
Those employers availing of EWSS on 31 December 2021 will continue to be eligible until 30 April 2022, assuming they meet the eligibility criteria which will continue to be a 30% reduction in turnover/customer orders in 2021 compared to 2019.
EWSS will close for new claims from 1 January 2022.
For December, January and February, the original two tier structure will apply as follows:
Weekly gross pay Subsidy
More than €1,462 Nil
€203 and €1,462 €203
€151.50 and €202.99 €150
Less than €151.50 Nil
For March and April 2022, a flat rate subsidy of €100 will replace €203 and €150. The rebate of Employers’ PRSI will no longer apply for these 2 months
An employer is permitted to make tax free payment of up to €3.20 per working day to remote workers to cover additional utility costs incurred by employees working from home.
Where an employer does not pay €3.20 to an e-worker, employees will be able to claim tax relief on 30% of the cost of vouched expenses for heat, light and broadband in respect of those days working from home.
Extension of BIK Exemption for Electric Vehicles
The BIK exemption for battery electric vehicles will be extended out to 2025 with a tapering effect on the vehicle value from 2023. For BIK purposes, the original market value of an electric vehicle will be reduced by €35,000 for 2023; €20,000 for 2024; and €10,000 for 2025.
Taxation of Flight Crew
Irish legislation provides that the employment income of a member of a flight crew is taxable in Ireland where the employment is exercised onboard an aircraft operating in international traffic and the place of effective management of the company operating the aircraft is in Ireland. The Budget provides for an amendment to exclude non-resident air crew where certain conditions are satisfied. Further detail will be included in the Finance Bill 2021.
Expansion of Debt Warehousing
The tax debt warehousing scheme will be expanded to allow proprietary directors to warehouse income tax liabilities relating to their Schedule E income from that employer company.
Tax treatment of income from micro-generation of electricity
A tax disregard of €200 is being introduced in respect of personal income received by households who sell residual electricity, which they generate, back to the grid.
Help to Buy (HTB) Incentive
The Help to Buy (HTB) incentive scheme which allows first time buyers to claim a refund of income tax and deposit interest retention tax up to €30,000 will be extended for 2022.
Landlords are entitled to claim a deduction (capped at €5,000 per premises) from rental income for certain pre-letting expenditure. This will be extended for a further 3 years until the end of 2024.
The reduced rate of 9% VAT will continue to apply to the hospitality sector until the end of August 2022.
The flat-rate addition scheme which applies to un-registered farmers will decrease from 5.6% to 5.5% for 2022.
Carbon tax will increase by €7.50 to €41 per tonne which will result in an increase in the cost of home heating through solid fuel or gas. A 60 litre tank of petrol and diesel will cost an additional €1.28 and €1.47 respectively. These increases will apply from midnight on 12th October 2021 for petrol and diesel and from May 2022 for all other fuels.
The excise duty (including VAT) on cigarettes will increase by 50 cents on a packet of 20, with a pro-rata increase on other tobacco products, from midnight on 12th October 2021.
Vehicle Registration Tax (VRT)
The €5,000 relief for Battery Electric vehicles is being extended to end 2023.
From January 2022, VRT rates will increase for cars with CO2 emissions in excess of 110g/km as follows:
CO2 emissions % Increase in VRT
110 g/km or less No change
111 – 130 g/km 1%
131 – 145 g/km 2%
146 g/km and above 4%
The Government has signed up to the OECD agreement on the future of corporation tax. Under this agreement the minimum effective rate of corporation tax will be set at 15% for large multinational companies. This rate will apply to companies with revenues in excess of €750 million. Companies with revenues of less than €750 million will still be subject to the 12.5% corporation tax rate.
Relief for certain start-up Companies
Relief for certain start-up companies will be extended from 3 years to 5 years until the end of 2026. This relief is granted in the form of a reduction in corporation tax.
Digital Gaming Sector
A new tax credit will be introduced to support the digital gaming companies for expenditure incurred on the design, production and testing of a digital game. The relief will be available at a rate of 32% on eligible expenditure of up to a maximum limit of €25 million per project. This is subject to State Aid approval.
Social Protection Measures
The weekly threshold for the higher rate of employer PRSI will be increased from €398 to €410. This will ensure that an employer will pay the reduced rate of employer PRSI of 8.8% in respect of an employee working a 39 hour week who is paid the national minimum wage.
Social Welfare Payments
All weekly social welfare payments will increase by €5 with effect from January 2022 with a proportionate increase for qualified adult dependants (i.e. State Pension will increase from €248.30 to €253.30; Maternity Benefit, Parent’s Benefit and Paternity Benefit will increase from €245 to €250; while Illness Benefit and Jobseeker’s Benefit will increase from €203 to €208 per week).
The rate payable for a qualified child will be increased from €38 to €40 per week for children under 12, and from €45 to €48 per week for children aged 12 and over, from January 2022.
A Christmas bonus of 100% of an individual’s weekly payment will be paid in December to recipients of long-term Social Welfare payments, to include those in receipt of PUP payments.
The Living Alone Allowance of €19 will be increased by €3 to €22 from January 2022.
The Weekly Fuel Allowance of €28 will be increased by €5 per week from €28 to €33. While the increase applies from midnight on 12th October 2021, it is likely that recipients will not receive payment for same until November.
The weekly income disregard for Carer’s allowance will increase from €332.50 to €350 for a single person and from €665 to €750 for a couple, and the capital disregard will increase from €20,000 to €50,000 from June 2022.
The period in which the Domiciliary Care Allowance can be paid for children in hospital will be extended from 3 months to 6 months from January 2022.
The earnings limit on Disability Allowance will increase from €350 to €375, and the weekly means disregard will increase from €2.50 to €7.60 from June 2022.
The Back to School Clothing and Footwear Allowances will be increased by €10 for each qualifying child from June 2022.
The Working Family Payment income threshold will increase by €10 from June 2022, regardless of family size.
National Minimum Wage (NMW)
The NMW will increase by 30 cent from €10.20 to €10.50 per hour in respect of hours worked on or after 1st January 2022. The increase in the USC Rate 2 band will ensure that employees working up to 39 hours per week in receipt of the NMW remain outside the top rates of USC, while the increase in the PRSI threshold will ensure employers continue to pay the lower rate of employer PRSI.
Parent’s leave will be increased by 2 weeks from 5 weeks to 7 weeks, accompanied by Parent’s Benefit payable by the DSP from July 2022.
Free GP Care for Children
The age limit for the GP visit card for children will be extended from those under 6 years of age to those under 8 years of age.
Drugs Payment Scheme
The monthly threshold for the Drugs Payment Scheme will be reduced by €14 from €114 to €100. This will result in a saving of €14 per month for those with monthly prescription charges in excess of €114 per month.
Treatment Benefit Scheme
Currently those aged 25 and over are required to have paid at least 260 PRSI contributions to qualify for the Treatment Benefits Scheme. For 25 to 28 year olds, this threshold is being reduced to 39 weeks.
A grant of 50% of up to €500 towards the cost of wigs, hairpieces, hair replacement systems due to illness will be implemented from June 2022.
Youth Travel Card
The introduction of a Youth Travel Card for those aged 19 to 23 was announced to allow them avail of a 50% discount on fares across the transport network.
Annual Update Day
Our Annual Update Day will provide delegates with a comprehensive update on TWSS and EWSS and will cover the relevant changes to PAYE, PRSI and USC introduced in Budget 2022 and Finance Bill 2021. In addition, this Update Day will cover the main changes affecting the ongoing operation of payroll to include any proposed changes for the coming years.
We are pleased to announce that a Revenue Speaker will be attending each session to provide a Revenue update on topics such as:
Payroll data quality issues
Real-time tax credits for employees and increased frequency of RPNs
Coding forward of liabilities arising from TWSS and PUP