Here are the main points from Budget 2021, as delivered by Minister for Finance Paschal Donohoe.
There is no change to tax rates for 2021, the standard rate will remain at 20% and the higher rate at 40%.
In addition, there is no change to Standard Rate Cut Off Points (SRCOPs).
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.
The Dependent Relative Tax Credit will be increased by €175 from €70 to €245 to support families with caring responsibilities.
For 2021, USC will apply at the following rates for those earning in excess of €13,000
|Up to €12,012||0.5%|
Medical card holders and individuals aged 70 years and older whose aggregate income does not exceed €60,000 will pay a maximum rate of 2%.
The emergency rate of USC remains at 8%.
Non-PAYE income in excess of €100,000 is subject to USC at 11%.
The National Minimum Wage will increase by 10 cent from €10.10 to €10.20 per hour from January 1st 2021.
The weekly threshold for the higher rate of employer PRSI will increase to €398 from €395, this is in line with the increase in the National Minimum Wage.
The age to qualify for the State Pension will remain at 66 for 2021, it was due to increase to 67.
The ‘waiting days’ for Illness Benefit will reduce from 6 days to 3 days for all new claims from the end of February 2021.
Parent’s Benefit has been increased by three weeks, this brings it up to five weeks. The leave must be taken during the first year following the birth of a child.
The Employment Wage Subsidy Scheme (EWSS) is due to continue until 31st March 2021, a wage subsidy scheme in some form is expected to be in place until the end of 2021.
The tax debt warehousing scheme will be expanded to include repayments of the Temporary Wage Subsidy Scheme (TWSS) owed by employers.
A new scheme was introduced for businesses impacted by Covid-19 restrictions, it will provide support for businesses that have had to close because of Covid-19. The scheme is operational from October 13th until March 31st 2021.
The payment will be calculated as a percentage of the business’s average weekly VAT exclusive turnover in 2019 subject to a maximum payment of €5,000 per week. The first payments are expected to be made in Mid-November.
The 13.5% rate of VAT for the tourism and hospitality sector will be reduced to 9% from November 1st 2020, the reduced rate will remain in place until December 31st 2021.
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Currently, employers are required to tax Illness Benefit and Occupational Injury Benefit payments paid to employees by the Department of Employment Affairs and Social Protection (DEASP).
With effect from 1st January 2018, employers will no longer be responsible for taxing Illness Benefit. From this date Revenue will tax Illness Benefit by adjusting employee's tax credits and/or rate bands. Revenue will receive real-time interfaces of taxable DEASP income and the adjusted tax credits and/or rate bands will be notified to employers via P2C files. As a result of this change there will be more frequent P2Cs for employees. While payroll operators will no longer need to tax Illness Benefit, it will be extremely important to implement amended P2Cs immediately.
In addition, from 1st January 2018 Illness Benefit letters will no longer be delivered to the ROS Inbox. In light of this change, employers may need to review their sick pay schemes.
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Managing sick leave can be a challenge for every employer. It is essential that businesses find the balance between supporting those employees who are genuinely sick and minimising unnecessary absences in order to reduce costs. Costs can include:
The 2011 IBEC Guide to Managing Absence found that over 11 million days are lost to absence in Ireland every year, costing businesses €1.5 billion or €818 per employee. The report also found that employees missed 5.98 days on average, an absence rate of 2.6%.
Absence levels can be addressed by taking some simple steps:
Return to Work Interviews: these are informal meetings between a line manager and an employee on the first day the employee returns to work. Return to work interviews are consistently rated as one of the most effective methods of managing absenteeism levels and it is recommended that they should be included in all sickness absence policies.