Universal Social Charge (USC)
The second USC rate band has increased from €20,484 to €20,687. The other bands and rates of USC remain unchanged.
The reduced rate of USC of 4.5% for medical card holders will be extended for a further year.
The exemption for income less than €13,000 also remains unchanged.
|
From €1 – €12,012
|
0.5%
|
|
From €12,013 – €20,687
|
2%
|
|
From €20,688 – €70,044
|
4.5%
|
|
Over €70,044
|
8%
|
The 11% rate will continue to apply for self-employed income over €100,000.
Earned income tax credit
The earned income tax credit will increase from €1,500 to €1,650.
|
Personal tax credits and bands
|
2021
|
2020
|
|
Personal tax credits
|
|
Single
|
€1,650
|
€1,650
|
|
Married
|
€3,300
|
€3,300
|
|
PAYE
|
€1,650
|
€1,650
|
|
Earned income tax credit for self-employed
|
€1,650
|
€1,500
|
|
Dependent relative tax credit
|
€245
|
€70
|
|
Age exemption limits (aged 65 and over)
|
|
Single
|
€18,000
|
€18,000
|
|
Married
|
€36,000
|
€36,000
|
|
20% standard rate tax bands
|
|
Single
|
€35,300
|
€35,300
|
|
Married one income
|
€44,300
|
€44,300
|
|
Married two incomes
|
€70,600
|
€70,600
|
Dependent relative tax credit
The dependent relative tax credit will increase from €70 to €245.
Help to Buy Scheme
The enhanced version of the Help to Buy Scheme introduced as part of the July Stimulus measures has been extended until 31 December 2021. The maximum credit is 10% of the house price, up to a maximum of €30,000.
Remote working
The allowance of €3.20 per day remains unchanged. Employers can make a payment to employees of up to €3.20 per day without benefit in kind arising.
Where employers do not offer the above, employees can claim a tax deduction for utility expenses in their income tax return to include light, heat and electricity. This has been updated to now include broadband costs. Claims can also be made for vouched expenses which are incurred wholly, exclusively and necessarily in carrying out employment duties.
Employer PRSI
From 1 January 2021, the weekly threshold for the higher rate of employer’s PRSI will increase from €394 to €398 to reflect the increase in the minimum wage.
Employment & Investment Incentive Scheme (EIIS)
The Minister announced that an assessment of the EIIS will be undertaken this year to determine how the scheme can be enhanced, taking into account the impact of the current crisis.
Entrepreneur relief
The relief provides for a 10% rate of CGT on chargeable gains on disposals of qualifying business assets, up to a lifetime limit of €1m.
From 1 January 2021, the requirement that 5% of the ordinary shares be held for three years will refer to any three-year period, not necessarily within the last five years. The individual will still be required to have worked in the business for a continuous period of at least three years within the previous five years.
