Following Ireland’s Budget Day announcements, we’ve outlined the main and most relevant changes that you should be aware of for your business in this blog. We do however anticipate there will further clarifications, alterations and adjustments to be made as announcements receive clarification.

Note
It is important to note that Minister Donohoe says that this year’s budget has been drawn up based on the assumption of “the continued presence of the virus in our country next year, and the absence of a broadly available vaccine, alongside the threat of a no-deal Brexit”.

Economy

  • Between €4bn and €5bn for a ‘super fund’ to deal with the twin-threat posed by Covid-19 and Brexit is being discussed.
  • At least €1bn in extra funding for Capital Expenditure in 2021 over and above what was budgeted for in 2020. Much of it will be spent on transport, such as roads projects, public transport and active travel including walking and cycling. It will also be spent on social housing and school building projects.

An additional €55 million for a “tourism business support scheme and €5 million for tourism product development” will be made available

Business

  • Businesses forced to close due to Covid-19 restrictions will be able to claim up to €5,000 per week from Revenue. The Covid-19 Restrictions Support Scheme (CRSS) will provide businesses with immediate funding if they are forced to close due to level three or higher restrictions. It will be focused on the tourism, hospitality and arts sector for now but maybe expanded further if higher restrictions are announced.
  • Existing grants for the live entertainment sector will be topped up with extra funding and new schemes are to be rolled out to protect jobs in the industry. One scheme will provide a minimum of €10,000 to live venues where concerts or plays have been forced to cancel due to the Covid-19 pandemic.
  • A reduced VAT rate for the hospitality sector from 13.5 per cent to 9 per cent will be introduced with effect from November 1st until December 2021.
  • To support small and medium-sized businesses, debt warehousing provisions will be extended for a period of a year with no interest.
  • A new variant of the Employment Wage Subsidy Scheme will kick in after the current scheme ends next spring.
  • An additional €55 million for a “tourism business support scheme and €5 million for tourism product development” will be made available.

There will be an increase in the dependent relative tax credit from €70 to €245.

Tax

  • The 12.5 per cent rate remains in place.
  • Work will commence on the development of a tax credit scheme for the digital gaming sector.
  • There will be no broad changes to income tax credits or bands.
  • In order to ensure the salary of a full-time worker on the minimum wage will remain outside the top rate of USC, the ceiling of the second USC rate band will be increased to €20,484 to €20,687.
  • The weekly threshold for the higher rate of employers PRSI will go from €394 to €398 to ensure there is no incentive to reduce working hours for a full-time minimum wage worker.
  • For the self-employed, a commitment to equalising the earned income credit with the PAYE credit by raising it by €150 to €1,650.
  • There will be an increase in the dependent relative tax credit from €70 to €245.
  • On climate change, carbon tax will be increased by €7.50 from €26 to €33.50 per tonne of CO2. Legislation will be provided to increase the tax each year by €7.50 up to 2029 and by €6.50 in 2030 to achieve €100 per tonne.
  • In terms of changes to taxing and cars, a modified new structure of rates and bands will be put in place with lower VRT rates for cars with lower emissions. The nitrogen oxide surcharge bands will also be changed so that higher emitting vehicles pay more.
  • The flat-rate addition for farmers (which compensates non-VAT registered farmers for irrecoverable VAT on their input costs) to increase from 5.4% to 5.6% from 1 January 2021

Capital gains tax

  • Entrepreneur’s relief to be available on disposals of shares by persons who have held the shares for a continuous period of three years at any time prior to the disposal (rather than a continuous period of three years in the five years prior to disposal as is the requirement currently).

The reduced 1% rate of stamp duty applicable to qualifying farm consolidation transactions to be extended to December 2022.

Property

  • The enhanced Help to Buy scheme which was introduced as part of the Government stimulus package on 23 July 2020 to be extended to 31 December 2021.
  • Residential development stamp duty refund scheme to be extended by one year to construction operations commenced by 31 December 2022, with the time allowed between commencement and completion of a qualifying project in order to be eligible for the refund also to be extended from 24 months to 30 months.
  • Stamp duty consanguinity relief applicable to transfers of agricultural property between certain family members to be extended for a further three years to 31 December 2023.
  • The reduced 1% rate of stamp duty applicable to qualifying farm consolidation transactions to be extended to December 2022.

There is €340m set aside to be spent on Brexit supports in 2021.

Brexit

  • There is €340m set aside to be spent on Brexit supports in 2021.
  • This includes an additional allocation for compliance expenditure in 2021. This will apply for work at ports and airports and provides for an additional 500 staff bringing the total provision for approximately 1,500 for operationalising checks ahead of January 1st.
  • A further €600 million will be allocated to the capital budget in addition to a planned increase of €1 billion for 2021 under the National Development Plan.

We hope that this information will be of use to you and that if these extensions are the wiggle room your company needs. Should you require any assistance or guidance on any business or financial matters, please do not hesitate to contact us.

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