Budget 2022

Budget 2022 was announced on Tuesday, 12 October 2021.

This document sets out a short summary of 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 2022.

Some of the changes announced in the Budget come into effect immediately. Others take effect from the beginning of January 2022 or later in 2022. 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.

More information on Budget 2022

You can access a range of information from gov.ie's Budget 2022 page including:

• The Expenditure Report (pdf)
• Spending review
• Ministers' speeches
• Taxation measures
• Budget publications
• Citizens' guide to Budget 2022

Other information is available about the Budget process including the Budget Cycle and Tax Strategy Group Papers (setting out options for tax policy changes).

€7 billion of funding is available to support the response to COVID-19, including funding that has been allocated to government departments. For areas where there is a high degree of certainty on costs, nearly €3 billion euro has been allocated to departments. Additional funding of just over €4 billion has been placed in a contingency fund in case it is needed. The funding includes:

• €600 million to extend the Employment Wage Subsidy Scheme until April 2022
• €100 million for Pandemic Unemployment Payment (PUP) payments for January 2022
• €800 million for vaccinations, testing and contact tracing, PPE and the HSE Winter Plan
• €150 million for the safe running of schools, and for additional education and training places
• €200 million to support public transport
• €200 million to support the tourism, hospitality and live entertainment sectors

Income tax rates will stay the same (at 20% and 40%), but there will be increases to tax credits and changes to the income tax bands.

The standard rate tax band (the amount you can earn before you start to pay the higher rate of tax) will be increased by €1,500.

The following tax credits will increase by €50:

• Personal Tax Credit
• Employee Tax Credit
• Earned Income Tax Credit
• Widowed Person or Surviving Civil Partner (without dependent child) Tax Credit

Tax relief on remote working expenses

Income tax relief on remote working expenses will be available at 30% of vouched expenses for electricity, heating and internet services for days spent working from home.

Universal Social Charge (USC)

The ceiling of the 2% USC band will increase by €608 to €21,295, so that the salary of a full-time worker on the minimum wage will remain outside the higher rates of USC.

Carbon tax

Carbon tax will increase by €7.50 per tonne of carbon dioxide emitted, from €33.50 to €41.00. This applies from midnight for auto fuels and from 1 May 2022 for all other fuels. See ‘Environment and climate’ below.

Vehicle registration tax (VRT)

From January 2022, revised VRT rates will be introduced. The changes include a:

• 1% increase for vehicles between bands 9-12
• 2% increase for vehicles between bands 13-15
• 4% increase for vehicles between bands 16-20

Employer’s PRSI

The weekly income threshold for the higher rate of employer’s PRSI will increase from €398 to €410 to ensure that there is no incentive to reduce the working hours for a full-time employee on the increased minimum wage (from 1 January 2022).

VAT

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

Corporation tax

A new corporation tax rate of 15% will be introduced for businesses with a turnover of more than €750 million per year.

Tobacco Products Tax

Tax on tobacco products will increase from 13 October. A packet of 20 cigarettes will increase by €0.50, with pro rata increases on other tobacco products.

The maximum rate of all weekly social welfare payments will increase by €5 with proportional increases for qualified adults and people on reduced rates of payment (January 2022).

This also applies to employment programmes such as Community Employment (CE), Tús and the Rural Social Scheme (January 2022).

People aged 25 and under who are getting a reduced rate of Jobseeker’s Allowance will get the full €5 increase (January 2022).

The weekly rate for a qualified child will increase by €2 from €38 to €40 for children under 12 years of age. It will increase by €3 from €45 to €48 for children aged 12 years and over (January 2022).

Christmas Bonus

A Christmas Bonus of 100% will be paid in early December 2021 to people getting a long-term social welfare payment (minimum payment €20).

Fuel Allowance

The Fuel Allowance will increase by €5 from €28 to €33 per week from 12 October 2022.

The income threshold for Fuel Allowance will increase by €20 from €100 to €120 (January 2022).

People who have been getting Jobseekers Allowance or Supplementary Welfare Allowance for 12 months will qualify for Fuel Allowance – this is a reduction of 3 months - from 15 months (September 2022).

Living Alone Increase

The Living Alone Increase will increase by €3 from €19 to €22 (January 2022).

Payments to families

The Working Family Payment threshold will increase by €10 across all family sizes (June 2022).

Parent’s Benefit will be extended by 2 weeks from 5 weeks to 7 weeks for the parents of children born or adopted from November 2019 (July 2022).

The Back to School Clothing and Footwear Allowance (BTSCFA) for a child aged 4-11 will increase by €10 from €150 to €160. For children aged 12 and over, it will also increase by €10 from €275 to €285.

The weekly income limit for one-parent households will be increased to the same as two-parent households (June 2022).

Disability and illness payments

The minimum paid PRSI contributions required to qualify for Treatment Benefit will decrease from 5 years (260 weeks) to 9 months (39 weeks) for people aged between 25 and 28 (June 2022).

A grant of 50% (up to €500) towards the cost of wigs, hairpieces or hair replacement systems due to illness will be introduced under the Treatment Benefit scheme (June 2022).

The income disregard for Carer's Allowance will increase from €332.50 to €350 for a single person and from €665 to €750 for a couple. The capital disregard will increase by €30,000 from €20,000 to €50,000 (June 2022).

The period during which Carer’s Allowance and Domiciliary Care Allowance can be paid for children in hospital will be extended from 3 months to 6 months (January 2022).

The earnings limit on Disability Allowance will increase by €25 from €350 to €375 and the weekly means disregard will increase from €2.50 to €7.60 (June 2022).

PhD scholarships will be disregarded in the means test for Blind Pension (January 2022).

Farm Assist

The list of agri-environmental schemes that attract a disregard under the Farm Assist scheme will be amended (October 2022).

Employer’s PRSI

The weekly income threshold for the higher rate of employer’s PRSI will increase from €398 to €410 to ensure that there is no incentive to reduce the working hours for a full-time employee on the increased minimum wage (from 1 January 2022).

The Department of Health has been allocated €22.2 billion.

€500 million will be available for testing and tracing, the delivery of booster vaccines and for personal protective equipment across the health service.

The Drugs Payment Scheme threshold will be reduced to €100 from €114 per month.

Increased access to dental treatment for medical card holders will be introduced.

Free GP care for 6 and 7 year olds will be introduced.

A women’s health package of €31 million will:

• Fund free contraception for women aged 17 to 25 (from August 2022)
• Provide additional funding for sexual assault treatment units
• Progress the National Maternity Strategy and the Gynaecology Model of Care

7,000 new posts will be added across the health system.

€24 million will be used to develop mental health services and €250 million will be available to tackle hospital waiting lists.

€8m will go towards building capacity of the National Ambulance Service.

Disability services

€105 million has been allocated to disability services, including supports for:

• School leavers
• People with disabilities inappropriately living in nursing homes

A total of €898 million is allocated to the Department of Enterprise, Trade and Employment in 2022. An additional €17 million is allocated for once-off COVID-19 business supports in 2022.

Income tax

The rate of income tax will stay the same, but tax credits will be increased. Each of the personal tax credit, employee tax credit and earned income credit will be increased by €50.

The standard rate band will be increased by €1,500.

Employer’s PRSI

The weekly income threshold for the higher rate of employer’s PRSI will increase from €398 to €410 to ensure that there is no incentive to reduce the working hours for a full-time employee on the increased minimum wage from 1 January 2022.

Minimum wage

The national minimum wage will increase by €0.30 to €10.50 per hour from 1 January 2022.

Leave for parents

Parent's leave and Parent's Benefit will be extended by 2 weeks to 7 weeks from July 2022.

Wage Subsidy Scheme for people with disabilities

The Wage Subsidy Scheme for people with disabilities will increase by €1 per hour (equivalent to 60% of National Minimum Wage) from January 2022.

Remote working tax relief

There will be remote working income tax relief of 30% on heating, electricity and broadband expenses.

Employability

The Job Interview Interpreter Grant, Workplace Equipment Adaptation Grant and Personal Reader Grant, currently available through Intreo, will also be available through Employability providers from January 2022.

Community Employment and Tús

There are additional places on the Community Employment and Tús employment programmes for 2022.

Employment Wage Subsidy Scheme (EWSS) changes

The EWSS will remain in place in a graduated form until 30 April 2022. There will be no change to EWSS for the months of October and November.

The changes from December are:

• Businesses availing of the EWSS on 31 December 2021 will continue to be supported until 30 April 2022.
• A two-rate structure of €151.50 and €203 will apply for December, January and February.
• A flat rate subsidy of €100 will apply for March and April. The reduced rate of Employers’ PRSI will no longer apply for these two months.

The scheme will close to new employers from 1 January 2022

VAT rate for hospitality and tourism

The reduced VAT rate of 9% for the hospitality and tourism sector will be extended until the end of August 2022.

Commercial rates waiver

The waiving of commercial rates due to local authorities has been extended until the end of 2021 to support businesses impacted by COVID-19.

Covid Credit Guarantee Scheme

Extra funding of €15 million will be provided for the Covid Credit Guarantee Scheme, providing low-cost loans for businesses negatively affected by COVID-19.

Gaming industry

A new tax credit for the digital gaming sector will be introduced, to help with the funding and testing of games (subject to European State aid approval). The relief will be available at a rate of 32% on eligible expenditure of up to €25 million.

Corporation Tax

A new corporate tax rate of 15% will be introduced for businesses with a turnover of more than €750 million per year. There will be no change to the corporate tax rate of 12.5% for businesses with a turnover less than €750m.

Relief for start-up companies

The Section 486C corporation tax relief for certain start-up companies will be extended to the end of 2026, with a 5-year qualification window.

Employment and Investment Incentive (EII)

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

• An extension of the scheme for a further 3 years
• The scheme will be opened up to a wider range of investment funds
• The rules around the “capital redemption window” for investors will be relaxed
• The 30% expenditure rule will be removed

Disruptive Technologies Innovation Fund (DTIF)

An additional €17 million of capital funding will be invested in research, development and deployment of disruptive technologies and applications.

Innovation Equity Fund

€90 million is allocated to a new Innovation Equity Fund which will invest in early-stage companies who have the potential to grow and scale up.

Digital Transition Fund

€10 million is allocated to a new Digital Transition Fund will help encourage the development and adoption of data analytics and AI.

Enterprise Transition Green Fund

A new Enterprise Transition Green Fund will be established for foreign and indigenous businesses.

Regional Property Programme

€10 million is allocated for IDA’s Regional Property Programme, which prepares state-of-the-art facilities around the country to attract investors to set up and create jobs.

Tourism, Culture, Arts, Gaeltacht, Sport and Media

A total of €1,197 million is allocated to the Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media in 2022.

€50 million is allocated to business continuity supports for the tourism industry. €39 million funding is allocated for tourism marketing and product development.

€25 million is allocated to supports for the live entertainment industry.

A new basic income guarantee for artists will be introduced from January 2022 on a pilot basis.

Primary and post-primary schools

The Department of Education allocation is €9.2 billion in 2022.

The School Transport Scheme will get an additional €30 million investment.

An additional 350 teachers will reduce the pupil/teacher ratio in primary schools by one point to 24:1

980 new teachers will be recruited to support children with special needs and 1165 new Special Needs Assistants (SNAs) will be recruited.

Funding of €18 million will be used to increase the number of schools in the DEIS schools programme.

Schools will be provided with books, audio books, and other media through once-off funding of €20 million.

The Hot School Meals Pilot Programme will be extended to the remaining DEIS primary schools who applied to join the scheme (January 2022).

Higher education, further education and skills

The Department of Further and Higher Education, Research, Innovation and Science allocation is €3.7 billion in 2022.

3320 new CAO places will be created.

The current Post Leaving Certificate course contribution fee of €200 will be abolished.

The Student Maintenance Grant will increase by €200 in 2022. The cut-off threshold for eligibility for the student grant will increase by €1000. The travel distance for the ‘non-adjacent’ rate will decrease to 30 km from 45 km.

Additional support for apprenticeships includes:

• A new Employer Apprenticeship Grant
• 7000 off-the-job training places for craft apprentices affected by COVID-19 restrictions

€3 million will be provided to support lifelong learning and literacy, digital and numeracy skills for adults.

Funding for childcare will total €716 million in 2022.

The Universal Subsidy under the National Childcare Scheme (NCS) will be extended to children up to 15 from September 2022.

A new funding stream for early years and childcare providers will be in place from September 2022.

Hours spent in pre-school or school will no longer be deducted from hours subsidised by the National Childcare Scheme.

Parent’s leave and Parent’s Benefit will be extended by 2 weeks to 7 weeks from July 2022.

The Department of Environment, Climate and Communications has been allocated €700 million in capital expenditure in 2022.

Carbon tax

Carbon tax has increased by €7.50 per tonne, from €33.50 per tonne to €41 per tonne. This applies to auto fuels from midnight on 12 October 2021. The carbon tax increase will apply to all other fuels (including household fuels) on 1 May 2022.

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

In 2022, €202 million of carbon tax revenue will support over 22,000 home energy upgrades. This includes upgrading over 6,000 homes to a Building Energy Rating (BER) of B2 or over. 4,500 homes will be upgraded under SEAI energy poverty schemes.

Vehicle Registration Tax (VRT)

From January 2022, revised VRT rates will be introduced. The changes include a:

• 1% increase for vehicles between bands 9-12
• 2% increase for vehicles between bands 13-15
• 4% increase for vehicle between bands 16-20

The €5,000 relief towards the private purchase of qualifying electric vehicles is extended to the end of 2023 (see ‘Transport’ below).

€6 billion is allocated to the Department of Housing, Local Government and Heritage in 2022.

Help to Buy

The Help to Buy Incentive Scheme is extended to the end of 2022. The Scheme will have a full review in 2022.

Social and affordable housing

Capital funding of €2.5 billion has been allocated for social and affordable housing in 2022, including 9,000 new-build social housing units, and over 4,000 affordable homes. These homes include affordable purchase and cost rental to be delivered through various funding channels including the Land Development Agency and the First Home scheme.

Funding for the Housing Assistance Payment (HAP) scheme is increased by €168 million in 2022 to provide for 14,000 new HAP tenancies (bringing the total number of tenancies supported to 66,000).

Funding of €133 million for the Rental Accommodation Scheme (RAS) will support a further 800 households in 2022, along with the ongoing cost of supporting 17,000 households already in the scheme.

Funding of €18 million is allocated in 2022 for the delivery of Traveller accommodation.

Supports for homeless people

Funding of €194 million has been made available for homeless services in 2022. This will support local authorities providing emergency accommodation and other services and help people to exit homelessness to tenancies as quickly as possible. Additional health supports have been allocated to assist with this.

Regeneration, adaptations and remediation

In 2022, €50 million is allocated to start the Croí Cónaithe fund to help service sites and refurbish properties in towns and villages, and to increase owner occupier apartment development in city centres.

€65 million is provided for 11,000 grants to adapt the homes of older people and people with a disability.

Funding of €20 million is provided to support the remediation of homes affected by pyrite under the Pyrite Remediation Scheme in 2022. In addition, funding for the remediation of homes affected by defective concrete blocks has been increased to €40m.

Funding of €30 million will support the remediation of over 1,500 voids (vacant dwellings in need of repair) in 2022.

Zoned Land Tax

A new Zoned Land Tax of 3% tax is being introduced to encourage the use of land that is zoned residential and mixed-use to build homes. The tax will apply to land which is zoned suitable for residential development and is serviced, but has not been developed for housing. A lead-in time for the general application of the Zoned Land Tax of 2 years is proposed for land zoned before January 2022, and a 3 year lead-in time for land zoned after January 2022. The Zoned Land Tax will replace the vacant sites levy when it comes into operation.

Pre-letting expenses

The deduction of certain pre-letting expenses incurred on vacant residential premises against rental income before first letting after a period of non-occupancy is extended to the end of 2024.

A total of €3.4 billion is allocated to the Department of Transport in 2022.

This includes funding for:

• BusConnects, MetroLink and the DART expansion programme (which will move to the planning phase)
• Public transport projects
• Switch to electric vehicles, including EV grants and funding for charging infrastructure
• Cycling, walking and greenway infrastructure projects
• Aviation industry including support for regional airports
• Carbon reduction programmes
• National, regional and local roads
• Maritime transport and safety, including support for the Irish Coast Guard
• Delivery of the first round of projects under the Safe Routes to School Programme

A new Youth Travel Card will enable people aged 19 to 23 to get a 50% reduction in public transport fares.

Vehicle registration tax (VRT)

Revised VRT rates will be introduced (January 2022). This includes:

• A 1% increase for vehicles between bands 9-12
• A 2% increase for vehicles between bands 13-15
• A 4% increase for vehicles between bands 16-20

The Carbon Tax will increase by €7.50 per tonne of carbon dioxide emitted, from €33.50 to €41.00. This applies from midnight for auto fuels and from 1 May 2022 for all other fuels. See ‘Environment and climate’ above.

The €5000 relief for electric vehicles is extended to the end of 2023.

The Department of Justice will get €3.2 billion in funding for 2021. This includes funding for:

• An extra 800 Garda recruits and an extra 400 Garda staff for specialist roles and office functions
• Improved mental health services in prisons and additional staff to improve healthcare services in prisons
• Additional psychologists to engage with people convicted of sexual offences
• Modernisation of the Courts Service including cyber security measures
• Awareness campaigns to combat sexual violence, gender-based violence and domestic violence
• Implementation of Supporting a Victim’s Journey review recommendations around consent, victims’ rights and supporting vulnerable witnesses
• Implementation of the recently launched Youth Justice Strategy which will develop and deliver programmes and early interventions for children and young people
• Increase staff at the Office of the Data Protection Commissioner (DPC) including additional specialist and technical staff
• A scheme to allow undocumented migrants apply for residence (to reflect the Programme for Government commitment to a regularisation scheme)
• The establishment of a new Community Safety Innovation Fund

Direct provision

Funding has also been provided to the Department of Children, Equality, Disability, Integration and Youth to continue its implementation of the planned International Protection Support System.

Brexit

Ireland will get €1.1 billion under the Brexit Adjustment Reserve. This is special once-off EU funding for measures addressing the economic and social consequences of Brexit. The costs incurred must be directly linked to countering the adverse effects of the UK's withdrawal.

Rural and community development

A total €376 million is allocated to the Department of Rural and Community Development. This includes funding for:

• Rural regeneration and development, through the Rural Regeneration and Development Fund, Town and Village Renewal, and the Outdoor Infrastructure Investment Scheme
• An increase of €4 million for the LEADER programme
• An increase of €4 million for the Social Inclusion and Community Activation Programme to focus on under-represented groups

Foreign Affairs and the Diaspora

Foreign Affairs funding will almost double to €25 million for 2022 to:

• Improve passport services
• Develop consular services in Irish embassies and consulates
• Fund emigrant support programmes and diaspora engagement
• Continue to promote North/South reconciliation and mutual understanding