Budget Highlights 2021

Budget Highlights 2021

INCOME TAX

• An increase in the Earned Income Credit from €1,500 to €1,650
• An increase in the Dependent Relative Credit from €70 to €245
• Extension of the Sea-going Naval Personnel Tax Credit to 31 December 2021 and to increase it to €1,500 for 2021 (from €1,270 in 2020). 
• €203 increase to the 2% USC rate band ceiling to €20,687
• The reduced rate of USC for medical card holders is being extended for a further year.

ADDITIONAL TAX MEASURES

• Temporary Reduction of VAT for Tourism and Hospitality items from 13.5% to 9% from 1 November 2020.
• Increase in the Farmers Flat Rate Addition from 5.4% to 5.6% 
• Revised balancing charge rules on capital allowances for intangibles with effect from 14 October
• From 1 January 2021 the weekly income threshold for the higher rate of employers PRSI will increase from €394 to €398.

MEASURES TO SUPPORT ENTERPRISE/ SMEs/ AGRI- SECTOR

• Expansion of Warehousing of tax liabilities to include repayments of Temporary Wage Subsidy Scheme funds owed by employers.
• Extension of Warehousing of tax liabilities for the adversely affected self-employed to include the 2019 balance and 2020 preliminary tax to allow such taxpayers to defer payment for a period of a year with no interest applying.  A 3 per cent interest rate will apply thereafter and will attract no surcharge.
• EWSS will continue in some form throughout 2021.
• The Film Tax Credit Regional Uplift scheme is being extended by one year by inserting an additional year of uplift at the rate of 5% in 2021. 
• Amendment of CGT Entrepreneurial Relief so that an individual who has owned at least 5 per cent of the shares for a continuous period of any three years qualifies for this relief. Previously, a person had to own at least 5 per cent for a continuous period of 3 years in the 5 years immediately prior to the disposal. 
• Farm Consolidation Stamp Duty Relief extended in its present format until 31 December 2022 
• Consanguinity (Stamp Duty) Relief extended in its present format until 31 December 2023 
• Housing Residential Development (Stamp Duty) Refund Scheme Extension from 31 December 2021 to 31 December 2022 with minor amendments.
• There is a two year extension of the Knowledge Development Box to 31/12/2022

COVID RESTRICTIONS SUPPORT SCHEME (CRSS)

• This scheme is designed to assist those businesses whose trade has been significantly impacted or temporarily closed as a result of the restrictions as set out in the Government’s ‘Living with Covid-19’ Plan. 
• The scheme will generally operate when Level 3 or higher is in place and will cease when restrictions are lifted. The sectors impacted by the current Level 3 nationwide restrictions are accommodation, food and the arts, recreation and entertainment.
• If the Government decides to move to a higher level of restriction then other sectors may qualify. 
• For these businesses, the Government will make a payment, based on their 2019 average weekly turnover, to provide support at a difficult time. 
• Qualifying businesses can apply to the Revenue Commissioners for a cash payment in respect of an advance credit for trading expenses for the period of the restrictions. The scheme will be effective from today, Budget Day, until 31st March 2021, and the first payments will be made to affected businesses by mid-November. 
• Payments will be calculated on the basis of 10 per cent of the first €1 million in turnover and 5 per cent thereafter, based on average VAT exclusive turnover for 2019. It will be subject to a maximum weekly payment of €5,000.
• The scheme will operate on a self-assessment basis and qualification will require a business to demonstrate that their turnover has been severely impacted; that is it may not exceed 20 per cent of the turnover for the corresponding period in 2019.

CLIMATE AND ENVIRONMENTAL MEASURES

• Carbon Tax €7.50 Increase in Carbon Tax Rate 
• Changes to Vehicle Registration Tax and to Motor Tax 
• The Accelerated Capital Allowance scheme for Energy Efficient Equipment is being extended for three years to 31/12/2023