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13 October 2021

Irish Budget 2022

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Currency - euros notes and coins

The Finance Minister Paschal Donohoe and Minister for Public Expenditure Michael McGrath presented the Irish budget for 2022 to the Dáil on 11 October.

Mr Donohoe told the house that inflation would peak next September to 3.7%, the highest since 2008. He also predicted that unemployment would fall to around 9% by the end of 2021, with the creation of 400,000 jobs in 2021 and 2022.

Our legislation expert, Rachel Mapleston highlights the main points of the budget which organisations in the Republic should be aware of.

Taxation

There will be an increase in the point where workers will start to pay income tax.  This will see a rise of €1500 in the standard rate tax band from 35,300 to €36,800. 

The Personal, Employee and Earned income tax credits will see an increase of €50 resulting in a change from €1650 to €1700 per annum.

Universal Social Charge will increase in line with the changes to minimum wage to ensure those benefitting from the 0.30c minimum wage increase stay below the higher rate threshold.  The 2% USC threshold will increase by €608 per annum changing the threshold from €20,687 to €21,295. 

Employment Wage Subsidy Scheme (EWSS)

There will be continuing support for employers impacted by Covid-19 with the extension of the Employment Wage Subsidy scheme to the end of April 2022. There will be no change to the scheme in October and November but a new rate structure of €151.50 and €203 from December to the end of February will apply. A final flat rate of €100 will be introduced for the final two months of March and April. The reduced employers PRSI will also expire for the final two months.

Employers PRSI

From the 1st January 2022 the weekly income threshold for the higher rate of employer’s PRSI will increase from €398 to €410.

Working from home

To facilitate and support remote work, an income tax deduction of 30% of the cost of vouched expenses for heat, electricity and broadband. Employees can claim these reliefs if they work at home and their employer does not pay them a remote working allowance.

Employment law

The Minimum wage will see an increase of 0.30c to €10.50 from 1st January 2022. This does not apply to those in a statutory apprenticeship, or those under 20.

Maternity, paternity, parent’s and illness benefit payments are to be increased by €5 per week from 1st January 2022.

An additional two weeks paid parent’s leave will be introduced providing seven weeks leave to be taken within the first year following the birth of a child from July 2022.

All our software products are kept up to date with the latest legislation changes, so that customers have the confidence they are complying with the law.

Rachel Mapleston

Rachel is a payroll legislation specialist and business analyst at MHR, with a particular interest in gender pay gap reporting.

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