Budget 2021 highlights

We are pleased to bring you our summary of the tax measures set out in Budget 2021.

13/10/2020

Budget 2021 was framed in the midst of immense economic challenges presented by COVID-19 and Brexit. Irish businesses face extraordinary headwinds, and the Budget both reaffirms existing measures and introduces new measures to assist businesses through these extraordinary times. Minister Donohoe recognised that SMEs are the backbone of the Irish economy and it is hoped that future policy initiatives of this Government will focus on and positively address the taxation costs faced by SMEs. In perhaps a sign that our working lives may permanently change, the Budget provides welcome clarity on the taxation of payments to and costs incurred by remote workers.

Should you have any taxation or business questions, our experienced team would be happy to share their insights with you.

Summary of measures:

COVID-19 measures
  • Equity fund to invest into domestic high innovation enterprises
  • Extension of tax warehousing scheme for self-employed income tax
  • Extension of Employment Wage Subsidy Scheme for all of 2021
  • New COVID-19 Restrictions Support Scheme of up to €5,000 per week for businesses affected by Level 3 or higher restrictions
  • Reduction in VAT rate from 13.5% to 9% for hospitality and tourism sector from 1 November 2020
  • Commercial rates waiver extended to end of 2020
Personal tax
  • No changes to USC rates – small increase in some bands
  • Income tax rates remain the same
  • Earned income credit for self-employed individuals increased by €150
  • Dependent relative tax credit increased by €175
  • Extension of Help to Buy Property Scheme to 31 December 2021
Business tax
  • Extension of the Knowledge Development Box tax rate of 6.25% for two years to 31 December 2022
  • Extension of accelerated capital allowances for energy-efficient equipment to 31 December 2023
  • Technical amendment to entrepreneur CGT relief
  • Employer’s PRSI income threshold increased
Stamp Duty
  • Extension to Stamp Duty Residential Development Relief Scheme to 31 December 2022
Other taxes
  • Price of 20 cigarettes to rise by 50c from midnight 13 October 2020
  • Carbon tax increased by €7.50 per tonne
  • Changes to VRT rates and motor tax
State pension
  • The planned increase in the State pension age to 67 from 1 January 2021 has been scrapped
Crowe Ireland Budget 2021 newsletter cover
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Temporary Wages Subsidy Scheme (TWSS) reconciliation deadline. 

The TWSS ended on 31 August and was replaced by the EWSS. Revenue are now commencing a detailed reconciliation process to identify the difference between the subsidy amounts refunded by Revenue to employers and the amounts of subsidy that were paid to employees by employers.

As part of this process, Revenue require every employer to provide details to Revenue of the actual subsidy paid to each employee on each pay date. The deadline for submission of this information is 31 October 2020.

Failure to provide this information to Revenue will result in Revenue seeking to recoup the total temporary wage subsidy paid and related interest charges.

Contact a member of our tax team if you require assistance with this reconciliation.

Contact us:

Grayson Buckley, Partner, Tax - Crowe Ireland
Grayson Buckley
Partner, Tax
John Byrne, Partner, Tax - Crowe Ireland
John Byrne
Partner, Tax
Cormac Doyle Crowe Ireland Tax Partner
Cormac Doyle
Partner, Tax
Lisa Kinsella, Partner, Tax - Crowe Ireland
Lisa Kinsella
Partner, Tax