Budget 2022 - An Employer Payroll Focus

Income Tax

There is no change to tax rates for 2022, the standard rate will remain at 20% and the higher rate at 40%.

• The Standard Rate Cut Off Point (SRCOP) has been increased by €1,500
• The Personal Tax Credit increased by €50 from €1,650 to €1,700
• The Employee Tax Credit increased by €50 from €1,650 to €1,700
• The Earned Income Credit increased by €50 from €1,650 to €1,700

Universal Social Charge (USC)

• Exemption threshold remains at €13,000
• There are no changes to the rates of USC
• The 2% USC rate band has increased by €608, from €20,687 to €21,295

USC Rates & Bands 2022

• €0 – €12,012 @ 0.5%
• €12,013 – €21,295 @ 2%
• €21,296 – €70,044 @ 4.5%
• €70,045 + @ 8%

Medical card holders and individuals aged 70 years and older whose aggregate income does not exceed €60,000 will continue to pay a maximum rate of 2%.

The emergency rate of USC remains at 8%.

Non-PAYE income in excess of €100,000 will continue to be subject to USC at 11%.

Employment Wage Subsidy Scheme

The Employment Wage Subsidy Scheme (EWSS) will continue until the end of April 2022 in a graduated form.

• The current rates will remain for October and November 2021
• Employers availing of EWSS on December 31st 2021 will continue to be eligible until April 30th 2022, assuming they meet the eligibility criteria which will continue to be a 30% reduction in turnover/customer orders in 2021 compared to 2019
• EWSS will close to new employers from January 1st 2022
• For December, January and February a two-rate structure will apply as follows:

 Level of subsidy the employer will receive is per paid employee

• For March and April 2022, a flat rate subsidy of €100 will apply
• The reduced rate of employer’s PRSI will no longer apply for the final two months of the scheme

National Minimum Wage

The National Minimum Wage will increase by 30 cent from €10.20 to €10.50 per hour from January 1st 2022.

Pay Related Social Insurance (PRSI)

The weekly threshold for the higher rate of employer PRSI will increase to €410 from €398, this is in line with the increase in the National Minimum Wage.

Parent’s Leave

Parent’s leave has been increased by two weeks, this brings it up to seven weeks from July 2022.

VAT

The reduced rate of 9% VAT for the tourism and hospitality sector will continue to apply until the end of August 2022.

Social Welfare Payments

There will be a €5 increase in all weekly Social Welfare payments with effect from January 2022. The maximum personal rate of Illness Benefit will be increased to €208 per week. Maternity Benefit, Parent’s Benefit and Paternity Benefit will be increased to €250 per week.

Remote Working

Where an employer does not pay the e-working allowance (€3.20 per day) to an e-worker, employees will be able to claim tax relief on 30% of the cost of vouched expenses for heat, light and broadband in respect of the days worked from home.

Extension of BIK Exemption for Electric Vehicles

The BIK exemption for battery electric vehicles will be extended out to 2025 with a tapering effect on the vehicle value. This measure will take effect from 2023. For BIK purposes, the original market value of an electric vehicle will be reduced by €35,000 for 2023, €24,000 for 2024 and €10,000 for 2025.

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Posted byAudrey MooneyinEmployment UpdateNewsPayroll