Finance Bill 2021 — the measures that will impact payroll

Impact of Irish Finance Bill on Payroll

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Several changes affecting payroll are due to come into effect from 1 January 2022. SARAH DALY summarises the key issues.

 

Finance Bill 2021 completed its fifth stage in the Dàil this week (2 December). When enacted, this Bill will implement the taxation changes announced on Budget Day. The Bill will now be debated in the Senate and is due to be signed into law by the President before the end of the year.

 

Changes that impact payroll

 

The full text of the Finance Bill is available on the Department of Finance website where you can also view any amendments that may be made as the legislation makes its way through the Oireachtas.

 

It is important to be aware that a number of changes announced in the Budget will affect payroll. These include:

 

  • Income tax — an increase in standard rate band and tax credits
  • Universal social charge — an increased USC threshold
  • Remote working relief — enhanced relief for employees working from home
  • Employment Wage Subsidy Scheme — extension of the EWSS scheme to 30 April 2022
  • Minimum wage — 30 cent increase in the national minimum wage rate from 1 January 2022

 

Income Tax

 

As announced in the Budget, the standard rate band for Income Tax is being increased by €1,500 with effect from 1 January 2022. There is also a €50 increase in each of the personal tax credit, employee tax credit and earned income credit.

 

 

USC Changes

 

The USC 2% threshold is being increased from €20,687 to €21,295 to take account of an increase in the national minimum wage.

 

The reduced rate of USC for full medical card holders under 70 years of age whose individual annual income does not exceed €60,000 is being extended to the end of the 2022 tax year.

 

 

Remote Working Relief

 

From 1 January 2022, individuals can claim an income tax deduction amounting to 30% of the cost of vouched expenses for heat, electricity and internet services, apportioned based on the number of days they worked from home during the year.

 

 

Employment Wage Subsidy Scheme (EWSS)

 

The Employment Wage Subsidy Scheme (EWSS) is being extended in graduated form up to 30 April 2022 however the scheme will close to new employers from 1 January 2022.

 

 

National Minimum Wage

 

The national minimum wage rate for individuals aged over 20 will increase to €10.50 per hour from 1 January 2022.

 

National Minimum Wage Rates from 1 January 2022

 

Minimum hourly rate (€)% of national minimum wage
Aged 20+10.50100
Aged 199.4590
Aged 188.4080
Aged under 187.3570

 

Other Measures

 

New measures that will impact workers in specific sectors including a change affecting the taxation of international flight crew.

 

GroForth Payroll Clients

 

GroForth is monitoring the progress of the Finance Bill through the Oireachtas so that our team will be ready to implement the changes in time for your 2022 payroll. In the meantime, if you have questions or concerns, please let us know.

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