Minister for Finance, Paschal Donohoe, and Minister for Public Expenditure, Michael McGrath delivered the 2022 Budget today, Tuesday 12 October 2021.
Budget 2022 has set Ireland on a path to sustainable recovery and growth as Irish businesses seek to restart and recover.
Tax cuts were a little higher than signalled meaning all workers & the self-employed will have more money in their pockets next year. Businesses will be very glad to see the extension of the Employment Wage Subsidy Scheme (EWSS).
Take a look at how Budget 2022 affects you:
- Personal Tax Credit increased by €50 to €1,700
- Employee Tax Credit/Earned Income Tax Credit also increased by €50 to €1,700
- Amount you can earn before suffering income tax at 40% increased by €1,500 to €36,800
- Employment Wage Subsidy Scheme to be extended beyond December 2021 to 30 April 2022 albeit at reduced rates
- VAT rate on hospitality and tourism sector to remain at 9% until 31 August 2022
- Commercial rates holiday to be extended to end of 2021 with amended conditions meaning not all businesses will qualify
- Amendment of Debt Warehousing Scheme which will benefit company directors
- Working from Home – improved tax relief for utilities and broadband costs incurred by employees working from home
Tax Credits and Rate Bands
The Personal Tax Credit will be increased for everybody by €50 to €1,700 from 01 January 2022.
The Earned Income Tax Credit and Employee Tax Credit are also being increased by €50 to €1,700 for 2022
In addition to this there will be a €1,500 increase in the amount you can earn at 20% before moving to the higher rate of 40%.
For 2022 the new 20% cut off point will be €36,800.
EMPLOYMENT WAGE SUBSIDY SCHEME (EWSS)
The Employment Wage Subsidy Scheme (EWSS), which was due to expire on 31 December 2021 has been extended for a further 4 months to 30 April 2022 although the rates will be reduced incrementally.
The updated details are as follows:
- current arrangements for EWSS remain in place until 30 November 2021;
- for the three months December 2021 to February 2022 there will be two subsidy rates namely €151.50 and €203 per employee per week;
- 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.
Eligibility for the scheme will continue to be a 30% reduction in turnover/customer orders in the full year 2021 as compared to the full year 2019.
The scheme will close to new employer entrants with effect from 1 January 2022
VAT REDUCTION FOR TOURISM/ HOSPITALITY SECTOR
The reduced 9% rate of VAT applying to the hospitality and tourism sector, which was due to expire on 31 December 2021, has been extended up to 31 August 2022.
Since 2008 there has been a relief from corporation tax for start-up companies in their first three years of trading.
The relief is granted by reducing the corporation tax payable on the profits of the new trade and gains on the disposal of any assets used for the purposes of the new trade. The amount of relief available is directly linked to the amount of Employers’ PRSI paid.
The relief will be extended for a period of five years until 31 December 2026.
The relief will also be amended such that start-up companies will be able to avail of the relief for up to five years, in place of the current three years.
Date Published 12 Oct 2021
This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation.