Budget 2022 – Business update
The 2022 budget is being promoted as business friendly by the government. There are plans to attract more foreign direct investment into Ireland with money going to IDA, Intertrade Ireland and many other state agencies to promote innovation and help businesses focus on digital technology. Below is a summary of the main tax changes that will impact your businesses and their employees.
12% Corporation Tax rate to remain for SME’s
Businesses with a turnover of less than €750m will retain the low corporation tax rate and this will increase to 15% for those with turnover above this.
Employment Wage Subsidy Scheme to be extended to April 2022. It will remain in its current form to the end of November.
From 1st of December 2021 to 28th February 2022, a two-rate structure of €151.50 and €203 will apply.
From 1st March 2022 to 30 April 2022, a flat subsidy of €100 will apply
It will be closed to new entrants from 1st January 2022 and the reduced rate of ER PRSI of .5% will cease on 28th February 2022.
The Eligibility for the scheme will continue to be based on at least a 30% reduction in turnover or customer orders in 2021 when compared with 2019.
9% VAT Rate
The 9 per cent Vat rate for the hospitality sector has been retained until 31st August 2022. This reduction was originally supposed to cease on 31st December 2021.
Commercial Rates waiver extension
Extension of commercial rates waiver to Q4 2021 for business that are not yet fully open.
Employment Investment Incentive scheme extended for a further 3 years and reformed to make it more attractive for investors.
50% Excise relief
-If you happen to be in the cider production business then good news for you. In this budget the government is introducing a 50 per cent excise relief for small producers of cider.
32% Tax relief for investment in Digital gaming
Refundable corporation tax credit at a rate of 32% for eligible expenditure incurred (capped at €25m per project) on the design, production and testing of a digital game. There will also be a per project minimum spend requirement of €100,000.
Start up CT Tax relief extension
Extension corporation tax relief for small start-up companies to 2026 (certain restrictions apply).
Bad news if you are a smoker, but good news of you are thinking of buying an electric vehicle. As was widely reported in the run up to the Budget, there was a modest increase to the standard rate income tax band. The entry point to the 40% income tax rate will be €36,800 for single individuals and €45,800 for married couples (with one earner). This means that the marginal rates of tax will remain at 48.5% for those earning between €36,801 and €70,044. A tax rate of 52% for employees earning over €70,044 and 55% for the self-employed earning over €100,000.
The Standard rate bands to be increased by €1,500 for 2022
Personal tax, employee tax and earned income credits increased by €50 (from €1,650 to €1,700).
2% USC rate band to be increased from €20,687 to €21,295.
Minimum wage up 30c to €10.50
BIK exemption for electric vehicles. The Benefit-in-Kind (BIK) exemption for BEVs will be extended out to 2025 with a tapering effect on the vehicle value. This measure will take effect from 1st January 2023. For BIK purposes, the original market value of an electric vehicle will be reduced – €35,000 for 2023; €20,000 for 2024; and €10,000 for 2025.
Income tax deduction of 30 per cent of cost of vouched heat, electricity and broadband expenses incurred while working from home.
€5,000 VRT relief available on the purchase of Battery Electric Vehicles to be extended to the end of 2023
Working from Home Allowance. It is proposed that an income tax deduction will be available, amounting to 30% of vouched heat, electricity and broadband costs incurred for days spent working from home.
For more detail and to download the Governments guide to the budget 2022, click on the button below.