News & Events

Budget 2022

On 12 October 2021, Finance Minister Paschal Donohoe presented Budget 2022 to Dáil Eireann. This budget was the first since the many COVID-19 related lockdowns and restrictions, which of course are not all removed as yet.

This budget has been presented in order to invest in Ireland’s future, meet the needs of today while putting the public finances on a sustainable path with a forecast of debt of just under €240 billion next year.

The budget introduced taxes and other measures to help curtail the current housing crisis with a view also on supporting entrepreneurs and other small business owners and the creation of jobs in Ireland. Unemployment has fallen to below 10% for the first time since the start of the pandemic, with a forecast for this to fall to just over 9% by the end of 2021. Employment is forecast to grow by just under 8% or around 150,000 jobs this year.

Minister Donohoe announced that Ireland has decided to join the global political agreement on the future of corporate tax. He notes that as a “small open economy that depends on rules and order in global tax and trade, an agreement was in our interests”. This will see a rise in the corporation tax rate to 15% for companies with revenues in excess of €750m.

As a result of the above, the budget introduced and/or extended reliefs and measures to assist with the creation of jobs and to encourage entrepreneurship in Ireland.

 

Further information on all changes introduced is discussed below:

Tax Changes in Budget 2022

Business Taxes

  • Employment Wage Subsidy Scheme (‘EWSS’)

The EWSS will remain in place in a graduated form until 30 April 2022 with the following being the main guidelines of this extension:

  1. No change to EWSS for Oct & Nov 2021
  2. From Dec 2021 & Feb 2022 a 2-rate structure (€151.50 & €203) will apply
  3. A flat rate subsidy of €100 will apply for Mar-Apr 2022
  4. The reduced rate of Employers PRSI will not apply for these last 2 months.

Businesses availing of EWSS support on 31 Dec 2021 will continue to be supported until 30 April 2022. The scheme will be closed to new applicants from 1 Jan 2022

  • 15 % Corporation Tax rate for companies with Revenue over €750M

The 12.5% Corporation Tax rate for companies with revenues of less than €750 million will remain in place. A new 15% CT rate will apply to companies whose revenue exceeds €750 million. It has not yet been confirmed when this change will apply.

  • Digital Gaming tax credit

A new corporation tax credit has been announced aimed at providing companies in the digital gaming development sector with tax relief of 32% of eligible expenses (up to €25 million per project) incurred on the design, production and testing of a game.

  • Accelerated Capital Allowances

The 100% first-year allowance will continue to be available until 31 December 2024.

  • Start-up relief

The Start-up corporation tax relief has been extended by a further 5 years to the end of 2026 for qualifying companies.

Taxation

Personal Taxes

  • Rate Band Increases

The standard rate band will increase from €35,300 to €36,800 for single individuals and from €44,300 to €45,800 for married couples/civil partners with one earner, an increase of €1,500.

  • Tax Credit Increases

The personal, employee and earned income tax credits will each increase by €50  from €1,650 to €1,700.

  • Universal Social Charge (USC)

The 2% USC rate band will increase from €20,687 to €21,295 ensuring that a full-time adult worker who benefits from the increase in the hourly minimum wage rate from €10.20 to €10.50 will remain outside the top rates of USC.

  • Remote Working

The income tax deduction for remote working will be increased to allow a 30% deduction for the cost of vouched expenses for heat, electricity, and broadband in respect of those days spent working from home.

  • Pre-letting Expenses

Section 97A TCA 1997 provides for a deduction (capped at €5,000 per premises) from rental income for certain pre-letting expenditures. This will be extended for a further three years, to the end of 2024.

  • Help To Buy Scheme

The Help to Buy Scheme is being extended at the current rates until the end of 2022, with a full review of the scheme due to be carried out during 2022

  • Mirco-generation of electricity

A tax disregard (€200) is being introduced in respect of personal income received by households who sell residual electricity that they generate back to the grid.

 

Indirect and Other Taxes Measures

  • EIIS

The Employment Investment Incentive Scheme is being extended for a further 3 years. The requirement to have spent 30% of the investment funds before relief can be claimed will be removed. The scheme will also be made available to a wider range of investment funds. The rules regarding the redemption of their capital by investors will also be relaxed. Details will be included in the Finance Bill.

  • VAT

The 9% VAT rate for the hospitality sector will continue until the end of August 2022.

The farmers’ flat rate addition is reduced from 5.6% to 5.5% for 2022.

  • Excise

20c is added to the price of a packet of 20 cigarettes.

  • VRT

Rates for vehicles in emissions bands 1-8 remain the same;

There is a 1% increase for bands 9-12;

There is a 2% increase for bands 13-15;

There is a 4% increase for the remaining bands – 16-20.

  • Electric vehicles – BIK exemption

The exemption is extended to 2025. It applies to battery vehicles. For the purpose of calculating BIK the exempt original market value will be reduced by a threshold figure from 2023. This will be tapered downwards as follows: 2023 – €35,000; 2024 – €20,000; 2025 – €10,000.

  • Employers PRSI

The weekly income threshold for the higher rate of 11.05% is increased from €398 to €410 from 1 January 2022.

  • Stock relief

The 25% relief for farmers is extended for a further 3 years.

The 100% relief for young, trained farmers is extended for another year as is the 50% relief for farmers in farm partnerships.

  • Stamp duty relief for young, trained farmers

This full relief is extended for a further year.

  • Zoned land tax

This tax will be introduced in the Finance Act 2021. The rate will be 3% of the market value of the land. There will be a 2-year lead-in time for land zoned before January 2022 and 3 years for land zoned from January 2022. This will replace the vacant site levy.

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