Other Tax Developments
Flat Rate Expenses – Revenue had previously planned to amend the tax treatment of employee expenses before 1 January 2020. During the course of their planning, Revenue encountered a number of policy issues. Subsequently, Revenue decided to defer any changes until January 2021.
As a result of the widespread and unprecedented disruption caused by the pandemic, the Flat Rate Expense Review Group have highlighted the need for “careful consideration” when determining the appropriate timing to make such changes to Flat Rate Expenses.
The Flat Rate Expense review may result in a change to the current list of flat rate expenses, by either increasing, reducing, maintaining or withdrawing the various expenses that cover 53 employments and 134 categories of expense.
In the event that the review results in changes that increase the burden of taxation on workers in a way that is not considered desirable, the review group presented the below options for consideration:
- Legislate to allow the individual expense be claimed by amending Section 115 TCA
- Increase the Employee (PAYE) Tax Credit in line with the average Flat Rate Expense claimed
- No change to the legislation and allow individual expenses to be claimed by workers on a vouched basis
No decision was announced by Government in Budget 2021. Any change would be of significant importance to employers and employees alike. Please stay in touch with the MyTaxRebate team as these initiatives evolve between now and year-end.
Here are some of the other key points from Budget 2021:
Social Welfare
– The proposed increase to the pension age will not proceed this year
– Living Alone Allowance increased by €5, to €19
– Fuel Allowance increased by €3.50, to €28/week
– Qualified Child Payment increased by €5 for over 12s, and by €2 for under 12s
– Carer Support Grant increased by €150, to €1,850
– Parent’s Benefit extended by a further 3 weeks
– PUP ‘Earnings Disregard’ introduced, allowing an individual earn €480 a month and still claim the PUP
– Christmas bonus granted for PUP recipients (received the PUP for more than 4 months – non-continuous)
Housing
– €5.2 billion in funding for Dept. of Housing (an increase of €773 million)
– Help-to-Buy Scheme extended until the end of 2021
– €500 million to construct 9,500 new social housing units in 2021
– 3,250 additional units added to social housing stock through local authorities and refurbishing projects
– €110 million for affordable housing and rental schemes
– €2.4 billions to support an additional 15,000 HAP
– €22 million for homelessness programmes
Health
– €4 billions in extra funding for the Dept. of Health
– Adult critical care beds increased by 66, from 255 to 321 by the end of 2021
– 1,146 extra acute beds
– 1,250 additional community beds in 2021
– 5 million additional home care hours
– €100 million extra funding for the disability sector
– €38 million for new mental health measures
Hospitality & Tourism
– VAT rate reduced from 13.5% to 9% from 1st November 2020 until 31st December 2021
– €55 million Tourism Business Support Scheme
– €5 million Tourism Product Development Fund
– €50 million Live Entertainment Supports
– Arts Council funding increased by €50 million, to €130 million
Cigarettes
– Excise duty on a packet of cigarettes increased by 50c, to €14. Pro-rata increase applies to other tobacco products
Alcohol
– No changes
Education
– €8.9 billion in funding for the Dept. of Education
– Pupil/teacher ratio reduced from 26:1 to 25:1
– 300 new teaching post announced
– €2 billion for special needs education, hiring an additional 990 SNAs
– 35,000 extra places in higher education, with 1,500 of 10,000 upskilling opportunities in the retrofitting sector
– Postgraduate grant increased by €1,500 and household income thresholds have also be adjusted
Climate Action
– Carbon tax increased by €7.50, from 4€33.50 per tonne/Co2. Applies to motor fuels from midnight, all other fuels are impacted from 1st May 2021. The €7.50 increase will apply each year until 2029, followed by a €.50 increase in 2030
– €300 million investment in a retrofitting project to provide energy efficient homes
Agriculture
– €1.8 billion for the Dept. of Agriculture
– €341 million for the Dept. of Rural and Community Affairs
– €5 million investment in digital hubs and broadband connection points