Oct 2020
15
Budget 2021: Employer Payroll Focus
Here are the main points from Budget 2021, as delivered by Minister for Finance Paschal Donohoe.
Pay As You Earn (PAYE)
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).
Earned Income Tax Credit
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.
Dependent Relative Tax Credit
The Dependent Relative Tax Credit will be increased by €175 from €70 to €245 to support families with caring responsibilities.
Universal Social Charge (USC)
- Exemption threshold remains at €13,000
- 2% threshold increased by €203 from €20,484 to €20,687
- Due to the increase to the 2% threshold, the income chargeable at 4.5% reduces from €49,560 to €49,357
- There are no changes to the rates of USC
For 2021, USC will apply at the following rates for those earning in excess of €13,000
| Rate Bands | Rate |
| Up to €12,012 | 0.5% |
| Next €8,675 | 2% |
| Next €49,357 | 4.5% |
| Balance | 8% |
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%.
National Minimum Wage
The National Minimum Wage will increase by 10 cent from €10.10 to €10.20 per hour from January 1st 2021.
Pay Related Social Insurance (PRSI)
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.
State Pension Age
The age to qualify for the State Pension will remain at 66 for 2021, it was due to increase to 67.
Illness Benefit
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 Leave
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.
Wage Subsidy Scheme
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.
Warehousing of Tax Liabilities
The tax debt warehousing scheme will be expanded to include repayments of the Temporary Wage Subsidy Scheme (TWSS) owed by employers.
Covid Restrictions Support Scheme (CRSS)
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.
VAT
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.
For the latest payroll updates, don’t miss our next free webinar where we are joined by Revenue.
Webinar: Wage Subsidy Scheme with Revenue
10.30am | 19th November
Webinar Agenda
- TWSS Reconciliation
- Employment Wage Subsidy Scheme - Key Points
- Employer & Employee Eligibility Criteria
- Operation of Payroll & Processing of Subsidy Claims
- Operating EWSS with BrightPay & Thesaurus Payroll Manager
- Q&A Panel Discussion
If you are unable to attend the webinar at the specified time, simply register and we will send you the recording afterwards.
Related Articles:
BrightPay COVID-19 Resource Hub
Blog: Customer update October 2020
On-demand COVID-19 Webinars
