Key takeaways of Budget 2022

Last updated Oct 13, 2021

DUBLIN: It’s another year, another budget with fresh hopes grounded on new developments and success. Considering all the elements of current COVID-19 uncertainties, employment considerations, taxation matters, welfare and pensions, child care and parenting; the much-awaited Irish Budget 2022 has been announced earlier today.

Paschal Donohoe opened his Budget speech with a reflection on the pandemic. The worst global pandemic in a century was unprecedented, he said, and we couldn’t have predicted the devastation it would cause.

“We are now entering a new phase” as we emerge from COVID and the Budget will seek to address the challenges facing the public and businesses in the years ahead, the Finance Minister said.

Let us walk you through the key takeaways from the economy, policy, tax announcements made by the Irish Finance Minister Paschal Donohoe in the Budget speech.

INCOME TAX (CHANGED)

An increase of € 1500 to Income tax thresholds or rates on income tax standard rate band for all earners, from €35,300 to €36,800 for single individuals and from €44,300 to €45,800 for married couples / civil partners with one earner.

The exemption limits, tax credits and standard rate bands applicable for the tax year 2022 are set out in detail on the last page.

People working from home will be able to claim income tax deduction amounting to 30% of the cost of vouched expenses for electricity, heating, and broadband in respect of those costs incurred while working from home.

DEPENDEND RELATIVE TAX CREDIT (UNCHANGED)

There is no change in the Dependent Relative Tax Credit €245

EARNED INCOME CREDIT (CHANGED)

An increase in the Earned Income Credit for self-employed from €1,650 to €1,700

UNIVERSAL SOCIAL CHARGE (CHANGED)

The second slab rate of the USC changed to 21,295. No other changes in USC

It is important note that no one earning less than €13,000 pays any USC at all; for those earning above this level, all their income is caught by the charge. Also, like PRSI, it is a straight charge on what you earn and is not affected by whether you are assessed as an individual taxpayer or jointly with a partner.

On the first €12,012 0.5%

On the next €9,283 2%

On the next €48,749 4.50%

Over €70,045 @ 8%

Self-employed income over €100,000: 3% surcharge

Medical card holders and individuals aged 70 years and older whose aggregate income does not exceed €60,000 will now pay a maximum USC rate of 2%.

WELFARE

· The Pandemic Unemployment Payment (PUP) is to remain in place until the end of February.

· An increase of €5 in the main weekly welfare payments.

· Weekly pension payments will also increase by €5.

· The Living Alone Allowance (for those on pensions) will increase by €3 per week.

· Changes to the income thresholds for Carer’s Allowance will mean a single person earning €350 per week and a couple earning €750 per week will still qualify.

· Parents Benefit is to be increased by two weeks to seven weeks from July 2022.

· The Back to School Allowance will be increased by €10.

· Fuel Allowance payments are set to rise by €5 per week – this kicks in from tonight.

· The full Christmas bonus will be paid to welfare recipients.

· The national minimum wage will increase by 30 cents to €10.50 per hour

TRANSPORT

For those aged 19-23 the cost of public transport is to be halved – this will be rolled out from the middle of 2022 with a new Youth Travel Card.

PRSI CONTRIBUTION (CHANGED)

From 1 January 2022 the weekly income threshold for the higher rate of employer’s PRSI will increase from €398 to €410.

Employers PRSI rate @ 8.80% if income is €410 p/w or less

11.05 % If income is above €410 p/w

HELP TO BUY SCHEME

Enhanced Help to buy scheme extended until end of 2022 at the higher max €30,000 rate

Income tax rebate, capped at €30,000, for first time buyers of a principal private residence. The relief is 5% of the house value (capped at €400,000). Maximum relief (i.e. €30,000) available for homes valued between €400,000 and €500,000. Claimants must take out a mortgage of at least 70% of the purchase price. The scheme only applies to new builds, self builds or a converted building not previously used as a dwelling and not to second hand properties. The scheme will be in place until 31 December 2022.

CLIMATE AND ENVIRONMENTAL MEASURES – CARBON TAX

Carbon Tax Increase the rate by €33.50 to 41.00 euro per tonne

LOCAL PROPERTY TAX (VARYING RATES) (UNCHANGED)

EXCISE DUTIES

Tobacco Products Tax: The excise duty on a packet of 20 cigarettes is being increased by 50 cents to €15. This will also take effect from midnight on 12 th October 2021. There will be no increased excise duty on alcohol and there will be a 50 cent excise relief for independent small producers of cider and other fermented drinks.

RENTAL SECTOR

The interest deduction on residential property lettings is 100%.

Extension of pre-letting expenses for landlords to end 2024 (S97A).

VAT

The reduced VAT rate of 9% for hospitality businesses will remain in place until the end of August next year.

EMPLOYMENT WAGE SUBSIDY SCHEME

The Employment Wage Subsidy Scheme will be extended until 30 April 2022, in a graduated form.

The following are the broad parameters of this extension: • current arrangements for EWSS remain in place until end-November 2021• for the three months December 2021 to February 2022, the original two-rate subsidy per employee per week (€151.50 and €203) will apply • for the two months March 2022 and April 2022, a single flat rate of €100 per week will apply• the existing reduced rate of Employers’ PRSI (0.5%) will continue to apply until the end of February 2022. The full Employers’ PRSI contribution will be reintroduced from 1 March 2022 until the scheme ends• scheme to conclude on 30 April 2022.

HOUSING

A zoned land tax is to be introduced to encourage the use of land for building homes.

An additional 14,000 Housing Assistance Payment (HAP) tenancies will be delivered.

€18 million for Traveler accommodation. Relief for pre-listing expenses for landlords will be extended for another three years to encourage landlords to return empty properties to the market as quickly as possible. As previously announced by the government, some 9,000 new build social housing units will be delivered next year as well as over 4,000 affordable homes.

CAPITAL ACQUISITIONS TAX (UNCHANGED)

Tax Free threshold for gifts and inheritances within Category A is 335,000.

BUSINESS TAX

Employment Investment Incentive (EII)

The EII scheme is being extended and, a number of important further modifications to the scheme are being introduced. The most significant of these is to open up the scheme to a wider range of investment funds in order to attract more investors into the scheme. It is also proposed to allow greater capacity for investors to redeem their capital without penalty – the so called ‘capital redemption window’ – and to remove the rule that 30% of an investment in an EII company must be spent before relief can be claimed.

# €60 million in funding to extend the commercial rates waiver until the end of the year.

EDUCATION AND CHILDCARE

350 new primary school teachers and more than 1,000 new SNAs. Funding of €16 million for an additional 980 special education teachers in special classes, special schools and mainstream schools. A reduction in class sizes. €4 million to extend the hot school meals programme.

Additional administrative principals in special schools and mainstream schools with two or more special classes. The Susi maintenance grant for higher educations students will be increased by €200. The national childcare scheme universal subsidy will be extended for children under 15 from September. A new funding stream for up to 4,700 early years and childcare providers.

STAMP DUTY – (UN CHANGED )

1% on properties valued up to €1,000,000

2% on balance of consideration in excess of €1,000,000

7.50 % on commercial (nonresidential) properties and other forms of property not otherwise exempt from duty.

PERSONAL TAX CREDITS

Tax Credit	2021 €	2022 €
Single Person	1,650	1,700
Married or in a Civil Partnership	3,300	3,400
Employee Tax Credit	1,650	1,700
Earned Income Tax Credit Max	1,650	1,700
Widowed Person or Surviving Civil Partner (without qualifying child)	2,190	2,240
Single Person Child Carer Tax Credit	1,650	1,650
Incapacitated Child Credit Max	3,300	3,300
Dependent Relative	245	245
Home Carer Tax Credit	1,600	1,600

TAX RATES AND TAX BANDS

The tax rates and bands remain unchanged:

Personal Circumstances	2021 €	2022 €
Single or Widowed or Surviving Civil Partner, without qualifying child	35,300 @ 20% Balance @ 40%	36,800 @ 20% Balance @ 40%
Single or Widowed or Surviving Civil Partner, qualifying for Single Person Child Carer Credit	39,300 @ 20% Balance @ 40%	40,800 @ 20% Balance @ 40%
Married or in a Civil Partnership, both Spouses or Civil Partners with Income	44,300 @ 20% with increase of 26,300 max. Balance @ 40%	45,800 @ 20% Balance @ 40%

UNIVERSAL SOCIAL CHARGE

The Standard Rates of USC

USC Thresholds
2021	2022
	Rate		Rate
Income up to €12,012.00	0.50%	Income up to €12,012.00	0.50%
Income from €12,012.01 to €20687.00	2%	Income from €12,012.01 to €21,295.00	2%
Income from €20,687.01 to €70,044.00	4.50%	Income from €21,295.01 to €70,044.00	4.50%
Income above €€70,044.00	8%	Income above €€70,044.00	8%