Budget 2020

Budget 2020 was announced on Tuesday, 8 October 2019.

This document sets out the main changes in taxation, social welfare, health, housing, education, employment and other areas.

It is an overview and not a complete statement of the measures announced in Budget 2020.

This document will be updated as more details become available.

Some of the changes announced in the Budget come into effect immediately. Others take effect from the beginning of January 2020 or later in 2020. Many others have to be finalised before coming into effect.

Some elements of these measures may change when the legislation required to bring them into effect is enacted.

For a full list of the Budget changes, please see the Department of Finance and Department of Public Expenditure and Reform website: budget.gov.ie and at gov.ie/budget.

€200 million is allocated to continue ongoing preparations for Brexit.

In the event of the United Kingdom exiting the European Union without a deal (a “no-deal Brexit”), the Government plans to provide additional funding:

• €365 million in Social Protection spending related to unemployment
• €45 million to support people to return to employment
• €650 million to support the most affected regions and sectors – agriculture, enterprise and tourism

The €650 million will be provided in a number of stages. The first amount of €220 million will be made available immediately and divided equally between agriculture and enterprise supports. €40 million will be used to support tourism and the use of the remainder will be decided at a later stage.

Agriculture, Food and the Marine

In the event of a no-deal Brexit, €110 million will be provided:

• €85 million for beef farmers
• €14 million for fisheries
• €6 million for other livestock farmers and the mushroom industry
• €5 million for the food and drinks processing industry

Enterprise

€110 million will be used to provide grants, loans and investment to firms that are vulnerable but viable in the event of a no-deal Brexit. The focus will be on the most exposed sectors, including food, manufacturing and internationally traded services.

The measures include:

• A €45 million Transition Fund for firms with 10 or more employees in manufacturing or international traded services
• A €42 million Rescue and Restructuring Fund for firms with liquidity or insolvency problems
• An €8 million Transformation Fund for larger firms, with €5 million for food businesses and €3 million for other businesses
• €5 million additional funding for Micro Finance Ireland (MFI) to loan to firms with less than 10 employees (or self-employed people)
• €5 million for a Micro Enterprises Emergency Brexit Fund, which Local Enterprise Offices will use to provide repayable grants to complement MFI support
• €2 million additional funding for Intertrade Ireland to support cross-border firms
• €3 million additional funding for regulatory bodies

Tourism

Funding of €40 million will focus on:

• Supporting regions that will suffer most from a no-deal Brexit, such as the border counties and the South-East
• Promoting tourism from Britain, through Tourism Ireland, and other key markets
• Promoting tourist travel into regional airports and ports
• Supporting tourism businesses through Fáilte Ireland and the Brexit Response Programme

Income tax

There are no changes to the standard or higher rate income tax bands.

The Home Carer Tax Credit will increase from €1,500 to €1,600.

The Earned Income Tax Credit for the self-employed will increase from €1,350 to €1,500.

Universal Social Charge (USC)

There are no changes to the rates of USC.

Medical card holders will continue to pay a reduced rate of USC until the end of December 2020.

Capital Acquisitions Tax

The Group A tax-free threshold, which applies primarily to gifts and inheritances from parents to their children, will be increased from €320,000 to €335,000. This increase applies to gifts or inheritances received on or after the 9 October 2019.

Excise Duties

Tobacco products tax

From midnight on 8 October 2019, the excise duty on a packet of 20 cigarettes will increase by 50 cent (including VAT) with a pro-rata increase on other tobacco products.

Carbon tax

The carbon tax on fuel will increase by €6 from €20 per tonne to €26 per tonne. The increase will apply to auto fuels from midnight on 8 October 2019 and to solid fuels from 1 May 2020.

Benefit-in-kind on electric vehicles

The 0% benefit-in-kind (BIK) rate for electric vehicles will be extended to 2022.

Vehicle Registration Tax (VRT)

VRT Environmental Health (NOx) Surcharge

A nitrogen oxide (NOx) emissions-based charge will replace the 1% diesel surcharge introduced in Budget 2019. The charge will be based on emissions of milligrams per kilometre and capped at a maximum of €4,850 for diesel vehicles and €600 for other vehicles. It will apply to passenger cars and SUVs registered for the first time from 1 January 2020.

VRT relief

Current VRT relief for hybrids and plug-in electric vehicles will be extended until 31 December 2020.

Other taxation measures

Special Assignee Relief Programme (SARP)

The Special Assignee Relief Programme (SARP) will be extended for a further 2 years until the end of 2022.

Foreign Earnings Deduction (FED)

The Foreign Earnings Deduction will be extended until 31 December 2022.

The total social protection budget in 2020 will be €21.1 billion.

Social welfare payments

There will be no increase in weekly social welfare payments. However, there are some changes to Jobseeker’s Allowance for people aged 25 and people aged under 25.

The weekly rate for a qualified child will increase by €2 from €34 to €36 for children under 12 years of age. It will increase by €3 from €37 to €40 for children aged 12 years and over (from 6 January 2020).

Jobseeker’s Allowance

Jobseeker’s Allowance for people aged 25 will increase to the maximum rate, from €157.80 to €203 (from January 2020).

Jobseeker’s Allowance for people aged under 25 will increase to the maximum rate, from €112.70 to €203, if they are living independently and getting a state housing support such as Rent Supplement, RAS or HAP (from January 2020).

Supplementary Welfare Allowance

Supplementary Welfare Allowance for people aged 25 will increase to the maximum rate, from €157.80 to €201 (from January 2020).

Supplementary Welfare Allowance for people aged under 25 will increase to the maximum rate, from €112.70 to €201, if living independently and getting a state housing support such as Rent Supplement, RAS or HAP (from January 2020).

Christmas Bonus

A Christmas Bonus of 100% will be paid in December 2019 to people getting a long-term social welfare payment (minimum payment of €20).

One-parent families

The earnings disregard for the One-Parent Family Payment and the Jobseeker’s Transitional payment will increase by €15 per week, from €150 to €165 per week (from January 2020).

Working Family Payment

Working Family Payment income thresholds will increase by €10 per week for families with up to 3 children (from January 2020).

Fuel Allowance

The Fuel Allowance will increase by €2 per week from €22.50 to €24.50 (from January 2020).

Living Alone Increase

The Living Alone Increase will increase by €5 per week from €9 to €14 (from 6 January 2020).

Carers

The number of hours that a carer can work or study every week outside the home and still get Carer’s Benefit or Carer’s Allowance will increase from 15 hours to 18.5 hours.

Means test for social welfare payments

The Blind Welfare Allowance paid by the Health Service Executive (HSE) will not be taken into account in the means test for a social welfare payment.

Household Benefits Package

Qualifying criteria for the Household Benefits Package will be broadened for people aged under 70 to allow another adult to live in the home.

Community Employment

Additional funding of €2 million will be made available in 2020.

Activation and training

€2.5 million is being provided in 2020 for specific activation and training supports for groups most distant from the labour market.

Cost of bereavement

Research will be commissioned to examine funeral poverty and the economic impact of bereavement.

Maintenance payments

A judge-led group will be set up to determine maintenance guidelines and regulations to achieve better outcomes for families.

Pay-Related Social Insurance (PRSI)

The National Training Fund Levy (NTFL), collected alongside Employer PRSI for Classes A and H, will increase by 0.1%, from 0.9% to 1.0%, from 1 January 2020. This means that employer rates (combined PRSI and NTFL) for Classes A and H will increase by 0.1% (from 1 January 2020).

A total of €2.5 billion is allocated to the Department of Housing, Planning and Local Government for housing in 2020.

Buying a home

The Help to Buy Incentive for first-time buyers or people building their first home is extended for two years to the end of 2021.

Social housing support

Capital funding of €1.5 billion has been allocated for social housing in 2020 to include the delivery of 8,500 new social homes through build and acquisition programmes.

Funding for the Housing Assistance Payment (HAP) scheme will increase by €80 million to €503 million in 2020 to provide for 15,750 new HAP tenancies, as well as supporting the 53,000 already on the HAP scheme at the end of 2019.

Funding of €133 million will allow a further 600 new households to be supported under the Rental Accommodation Scheme (RAS) in 2020, along with the ongoing cost of supporting over 18,100 households already in the scheme.

Funding of €14.5 million is allocated for the delivery of Traveller-specific accommodation.

Funding of €25 million is provided to support and improve the energy efficiency of 1,000 social housing homes and an additional €20 million is being provided from the proceeds of the carbon tax to begin a programme of deep retrofitting of social housing homes in the midlands.

Supports for homeless people

The allocation for homeless services will increase by €20 million to €166 million in 2020. This will be used to meet the continuing demand for homeless services and the delivery of supported temporary accommodation.

Mortgage arrears

The Abhaile scheme has been extended for a further 3 years to continue to provide support and advice for people in mortgage arrears.

Affordability

€126 million is allocated to the Serviced Sites Fund in 2020 to provide infrastructure to support the delivery of homes to purchase or rent at discounted prices, with 6,200 homes in total to be delivered over the life of the fund.

€60 million is allocated to the Local Infrastructure Housing Activation Fund to support the provision of infrastructure to facilitate the delivery of private, social and affordable homes in the coming years.

Regeneration, adaptations and remediation

Funding of €130 million is being provided for the Urban and Regeneration Development Fund. The fund is intended to help to rejuvenate significant but underused areas in Ireland’s 5 cities and other large towns. A second call for proposals for 2020 will be made shortly.

The National Regeneration Programme which supports regeneration projects in economically disadvantaged communities is allocated funding of €72 million in 2020.

The Living City Initiative that provides tax relief for money spent on refurbishing or converting residential or commercial properties in specified cities has been extended until 31 December 2022.

€59 million is provided to deliver up to 12,000 grants to adapt the homes of older people and people with a disability.

Funding of €40 million is provided to support the remediation of homes affected by pyrite under the Pyrite Remediation Scheme and also to support a new grant scheme for homes in Donegal and Mayo affected by defective concrete blocks.

Private rented housing

The Residential Tenancies Board will receive increased funding of €2 million in 2020 to support its increased powers to investigate and sanction non-compliance with Rent Pressure Zone measures. The funding will also enable RTB to begin the annual registration of tenancies expected to commence in early 2020.

Stamp duty

The rate of stamp duty applicable to non-residential property is increased by 1.5% with effect from midnight, 8 October 2019.

Key Employee Engagement Programme (KEEP)

KEEP facilitates the use of a share-based remuneration by small and medium-sized enterprises (SMEs) to attract key employees. It is available for qualifying share options granted between 1 January 2018 and 31 December 2023. Budget 2020 has introduced changes which include:

• Companies that operate through a group structure will be allowed to qualify for KEEP
• Conditions for qualifying employees are to be broadened out to allow for part-time or flexible working and movement within group structures
• Qualifying shares to include existing as well as new shares

Employment and Investment Incentive (EII)

The EII provides individual investors with tax relief for risk capital investments in qualifying SMEs. The changes are:

• You can claim the full amount of the tax relief (40%) in the year in which the investment is made
• The annual investment limit for the Employment and Investment Incentive will be increased to €250,000
• An annual investment limit of €500,000 will be introduced for investors who are prepared to invest in the EII for 10 years or more

Research and Development Tax Credit

The Research and Development Tax Credit allows companies carrying out research and development to claim tax relief. The changes are:

• Small and micro companies can claim a higher rate of credit of 30%
• An increase in the limit of outsourcing third-level institutes of education from 5% to 15%

Earned Income Tax Credit

The Earned Income Tax Credit will increase from €1,350 to €1,500. This is relevant for taxpayers earning self-employed trading or professional income in certain cases and for business owners or managers who are not eligible for a Pay As You Earn (PAYE) credit on their salary income.

Farm restructuring relief

The Capital Gains Tax farm restructuring relief, which is due to expire on 31 December 2019, is being extended to 31 December 2022 subject to state aid approval.

Disruptive Technologies Innovation Fund (DTIF)

An additional €10 million of capital funding is immediately available to invest in research, development and deployment of disruptive technologies and applications.

Science Foundation Ireland (SFI)

An additional €2 million in capital funding will go to SFI research centres.

Electricity tax

The rate of electricity tax for business will increase from €0.50 to €1 per megawatt hour (from 1 January 2020).

Stamp duty

There is an increase in the rate of stamp duty applicable to non-residential property from 6% to 7.5% with effect from midnight on 8 October 2019.

Minimum wage

The Government has accepted the recommendations of the Low Pay Commission that the minimum wage be increased by 30c to €10.10. A decision on when the Commission’s recommendation will commence will be made when the outcome of the Brexit negotiations becomes clearer.

Brexit-related supports for business

Short-Time Work Support Scheme

The Department of Social Protection will provide an opportunity for employers to retain skilled labour in a reduced capacity and avoid permanent lay-offs and associated redundancy costs.

No-deal Brexit

€110 million will be used to provide grants, loans and investment to firms that are vulnerable but viable in the event of a no-deal Brexit. The focus will be on the most exposed sectors, including food, manufacturing and internationally traded services.

The measures include:

• A €45 million Transition Fund for firms with 10 or more employees in manufacturing or international traded services
• A €42 million Rescue and Restructuring Fund for firms with liquidity or insolvency problems
• An €8 million Transformation Fund for larger firms, with €5 million for food businesses and €3 million for other businesses
• €5 million additional funding for Micro Finance Ireland (MFI) to loan to firms with less than 10 employees (or self-employed people)
• €5 million for a Micro Enterprises Emergency Brexit Fund, which Local Enterprise Offices will use to provide repayable grants to complement MFI support
• €2 million additional funding for Intertrade Ireland to support cross-border firms
• €3 million additional funding for regulatory bodies

Primary and post-primary schools

From September 2020, there will be an extra 1,600 posts in schools. Of these, 150 are new mainstream teaching posts in schools and 400 are additional teaching posts to support children with special needs.

A further 1,000 Special Needs Assistants (SNAs) will be recruited, bringing the total number to over 17,000 in 2020.

There will be over 1,300 new special class places for children with special educational needs.

The pupil threshold for appointing and retaining teachers in small schools (with 4 teachers or less) will be reduced by one student (from September 2020).

The standard capitation grant will increase by 2.5% from September 2020.

A pilot programme to provide funding for school books will be delivered in primary schools.

An additional €26 million will be allocated for the School Transport Scheme.

An additional €4 million is allocated to provide hot school meals for up to 30,000 children in 2020.

Higher education, further education and skills

3,000 extra places will be provided in higher educationunder the new Human Capital Initiative (HCI) for sectors with identified priority skills needs.

There will be almost 7,000 new apprenticeship training placesin 2020.

An extra €8 million is provided for Skillnet Ireland.

Child and family support

Extra funding of €54million is allocated to childcare services for the introduction of the National Childcare Scheme (NCS), to meet the continuing cost of the ECCE programme, to fund the Access and Inclusion Model (AIM) and to support the introduction of a Sectoral Employment Order setting the statutory minimum pay and conditions in the childcare sector.

The maximum hours under the National Childcare Scheme for pre-school childcare will increase from 40 hours to 45 hours per week for working parents and from 15 hours to 20 hours per week for low income parents not working or studying. The maximum hours for school age childcare for low income parents who return to work will increase from 17 hours to 22 hours per week (from September 2020).

Additional funding of €29 million is allocated to Tusla to continue work to reduce the number of children awaiting the allocation of a social worker and address cost pressures in residential and foster care.

Funding for youth services and to implement the LGBTI+ National Youth Strategy and the National Youth Strategy will increase by €2 million to €65 million for 2020.

The Department of Communications, Climate Action and Environment has been allocated €399 million in 2020.

Climate change

Carbon tax has been increased from €20 per tonne to €26 per tonne. This applies from midnight on 8 October 2019 on petrol and diesel - for motor vehicles. The carbon tax increase will apply to other fuels (including household fuels) on 1 May 2020.

The tables below show the estimated price increases on commonly used fuels:

Electricity prices will be increased for business users to bring them into line with domestic users.

A nitrogen oxide (NOx) emissions-based charge will replace the 1% diesel surcharge introduced in Budget 2019. The charge will be based on emissions of milligrams per kilometre and capped at a maximum of €4,850 for diesel vehicles and €600 for other vehicles. It will apply to passenger cars and SUVs registered for the first time from 1 January 2020.

VRT relief for hybrid (and plug-in hybrid) vehicles is extended until 31 December 2020.

The benefit-in-kind zero rate on electric vehicles has been extended to 2022.

€8 million has been allocated to the Department of Communications, Climate Action and Environment to maintain grants for those buying electric cars.

€10.5 million of additional funding has been provided for further investment in greenways, urban cycling and the electric vehicle charging infrastructure. The new funding will:

• Double the number of Local Authority on-street charge points that will be installed in 2020
• Support a new scheme to install communal charging points at apartment blocks
• Facilitate the roll-out of fast charging points to taxi ranks at transport hubs around the country

€13 million is allocated to the Warmer Homes Scheme to provide free energy efficiency upgrades to households that are considered to be at risk of energy poverty.

An additional €5 million has been provided for peatland rehabilitation, aimed at reducing greenhouse gas emissions and enhancing bio-diversity.

Agriculture

€3 million is being provided to pilot new agri-environmental schemes in 2020. These schemes will aim to reduce emissions from the sector.

The farm restructuring relief programme has been extended to the end of 2022 with no change to the conditions of the relief.

The prescription charge for medical card holders will be reduced by €0.50. This will bring the charge to €1.50 per item for people under the age of 70 and to €1 per item for people over the age of 70 (from July 2020).

The monthly threshold for the Drugs Payment Scheme will be reduced from €124 to €114 (September 2020).

The medical card weekly income limit for people over 70 will be increased by €50 for a single person (to €550) and by €150 for a couple (to €1,050) from July 2020.

The Government plans to extend free GP care to children under the age of 8 and provide free dental care for children under 6 (September 2020).

The number of home care hours provided in 2020 will be increased by 1 million.

The HSE will review and extend arrangements for the provision of discretionary medical cards to those with a terminal illness.

To reduce patient waiting times, funding for the National Treatment Purchase Fund will be increased by €25 million to €100 million.

An Garda Síochána

Funding is provided to recruit up to 700 additional trainee Gardaí.

Judicial Council

€1 million is provided to establish the Judicial Council in 2020, to promote and maintain high standards of conduct by judges and provide a complaints process for misconduct.

Rainy Day Fund

The Government will not make the planned contribution of €500 million to the Rainy Day Fund, due to the possibility of a no-deal Brexit.