2021 Budget Briefs

The Ministers for Finance and Public Expenditure & Reform, Paschal Donohoe and Michael McGrath presented their Budget speeches on Tuesday 13th October 2020. These changes were announced and are due to take effect from 1st January 2021, unless otherwise stated.

Just on a Personal Note!
The following changes to tax credits will apply for 2021:

Earned Income Tax Credit
The Earned Income Tax Credit will be increased by €150 from €1,500 to €1,650 to bring it in line with the PAYE tax credit.Where an individual qualifies for the Earned Income Tax Credit and PAYE Tax Credit, the combined tax credits cannot exceed €1,650.

Dependent Relative Tax Credit
The Dependent Relative Tax Credit will be increased by €175 from €70 to €245.
 
Universal Social Charge (USC)
There was no change to the USC exemption threshold of €13,000. The threshold for the 2% rate will be increased by €203 from €20,484 to €20,687 in line with the increase in the national minimum wage. As a result, the amount of income liable to USC at 4.5% reduces from €49,560 to €49,357. There has been no change to the rates of USC. For 2021, USC will apply at the following rates for those earning in excess of €13,000:
 
Rate Bands Rate
Up to €12,0120. @ 5%, Next @ €8,6752%, Next €49,357 @4.5%, Balance @ 8%Non PAYE income in excess of €100,000 will continue to be subject to a 3% USC surcharge. Medical card holders and individuals aged 70 years and over whose aggregate income does not exceed €60,000 will continue to pay a maximum USC rate of 2% in 2021. The rate of 8% USC will continue to apply under the Emergency Basis.

PRSI
The weekly threshold for the higher rate of employer PRSI under Class A will increase from €395 to €398 in line with the increase in the national minimum wage. This will ensure that an employer will pay the reduced rate of employer PRSI of 8.8% in respect of an employee working a 39 hour week who is paid the national minimum wage.
 
Social Welfare Payments
There will be no broad increases to social welfare payments. Some targeted increases are as follows:

• The rate payable in respect of a qualifying child will be increased by €5 from €40 to €45 in respect of a child aged 12 years or over and by €2 from €36 to €38 in respect of a child who is under 12 years of age.
• The weekly Fuel Allowance will increase from €24.50 to €28 and continue to be payable for 28 weeks of the year.
• The Living Alone Allowance will increase by €5 from €14 to €19 per week which is payable to people aged 66 or over who are living alone.
• The Island Allowance, which is payable to people living on certain offshore islands, will increase from €12.70 to €20 per week in January 2021.
• The Carers Support Grant will increase from €1,700 to €1,850.
• The earnings disregard for people who are working and in receipt of Disability Allowance will increase by €20 from €120 to €140.
• The income limit of €425 which currently applies to those in receipt of One Parent Family Payment will be removed from April 2021.
• An earnings disregard will be introduced in respect of self-employed individuals who are claiming the Pandemic Unemployment Payment (PUP) which will enable them to earn up to €480 per month while still retaining their PUP payment.
• A Christmas bonus of 100% of an individual's weekly payment will be paid in the first week in December to recipients of long-term Social Welfare payments. For 2020, the bonus will be paid on an exceptional basis to recipients of Job Seeker's Benefit and PUP who have been receiving these payments for 4 months or more.
• A €10 increase in the weekly income threshold for Working Family Payment for families with up to 3 children.
• Newly widowed parents with dependent children will receive a grant of €8,000 from January 2021, an increase of €2,000.

 
Reduction in Waiting Days for Illness Benefit
The number of waiting days for Illness Benefit will reduce from 6 days to 3 days for all new claims from the end of February 2021. This may reduce the cost to employers who provide a sick pay scheme for employees.
 
State Pension Age
The age to qualify for the State Pension was due to increase from 66 to 67 in 2021, however, the Minister for Public Expenditure and Reform confirmed that pension age will remain at 66 years for next year.
 
Student Universal Support Grant (SUSI)
The SUSI fee grant for postgraduate study will be increased by €1,500 from €2,000 to €3,500 and the income eligibility threshold for the grant will be adjusted.

Also included were issues on taxation and other taxes, employment, social protection measures, Brexit preparations and support and a whole lot more. Please click the 2021 budget image to get more detail...

Disclaimer: Please Note:
Budget 2021 information briefs, is issued for information purposes only. It is intended to describe the subject in general terms. As such, it does not attempt to cover every issue which may arise in relation to the subject. It does not purport to be a legal interpretation of the statutory provisions and consequently, responsibility cannot be accepted for any liability incurred or loss suffered as a result of relying on any matter published herein.
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