Budget 2021: Main Changes in Taxation

graphs

Budget 2021: Main Changes in Taxation

The Irish Government has announced the Budget 2021, we have listed out the overview of the main changes in taxation area as below:

 

  • Minimum Wage Rate: Increase from €10.10 to €10.20 per hour.

  • Income tax

Standard or higher rate income tax bands: no changes are made.

 

Earned Income Tax Credit: Increase from €1,500 to €1,650. 

This will also be applied for the 2020 tax year.

 

Dependent Relative Tax Credit: Increase from €70 to €245.

  • Universal Social Charge (USC)

2% band: Increase from €20,484 to €20,687. The salary of full-time workers on the minimum wage will remain outside the higher rates of USC.

 

The USC Rates & Bands from 1 January 2021: 

 

€0 – €12,012 0.5%
€12,012 – €20,687 2%
€20,687 – €70,044 4.5%
€70,044+ 8%

 

Employer’s PRSI: The weekly income threshold for the higher rate of employer’s PRSI will increase from €394 to €398.

 

Medical card holders will continue to pay a reduced rate of USC until the end of December 2021.

  • Excise duties

From midnight on 13 October 2020, the excise duty on a packet of 20 cigarettes will increase by 50 cent and with a pro-rata increase on other tobacco products.

  • Carbon tax

The carbon tax on fuel will increase from €26 to €33.50 per tonne. The will apply to auto fuels from midnight on 13 October 2020 and to solid fuels from May 2021.

  • Debt warehousing for self-assessed taxpayers

The tax debt warehousing scheme will be extended to taxpayers who are self-assessed for income tax that is nagetively impacted by the pandemic Covid-19. Taxpayers who are unable to pay their tax liability balance for 2019 and preliminary tax for 2020 can defer payment for 12 months at 0% interest rate.

  • VAT rate

There is a temporary reduction of VAT for Tourism and Hospitality items from 13.5% to 9% from 1 November 2020. 

 

 

Accounting Pro is Ireland’s premier contractor accounting service.  We are here to help the busy contractor and company, with all your accounting and payroll needs. We are both an umbrella company and umbrella corporation and we can create your limited company. We are experts in contractor pensions, contractor health insurance, illness and sick benefit for the self employed and contractor expenses. To learn more about what we do please review https://www.accounting-pro.ie/  and contact us by email:  info@accounting-pro.ie or phone us +353 1 592 1802. For the UK see Accounting-Pro UK. “Budget 2021: Main Changes in Taxation” is an article written by Accounting-Pro Ireland for the benefit of everyone. Feel free to share it but please give attribution on a CC BY-SA license.

About Author

Related posts

Leave a Reply