Budget 2021: Here's what you need to know

The Finance Minister Paschal Donohoe has delivered a €17.7bn budget for 2021. It is the biggest...
Jack Quann
Jack Quann

13.51 13 Oct 2020

Share this article

Budget 2021: Here's what you n...

Budget 2021: Here's what you need to know

Jack Quann
Jack Quann

13.51 13 Oct 2020

Share this article

The Finance Minister Paschal Donohoe has delivered a €17.7bn budget for 2021.

It is the biggest budget in the history of the State, as the Government borrows millions to meet the cost of the COVID-19 pandemic and Brexit.

To date, the total value of support measures amount to €24.5bn - nearly eight-times last year's budget plans.


The budget is framed on the basis of no bilateral trade deal between the EU and the UK, as well as the continued presence of COVID-19 with no vaccine.

As part of the measures, there will be a €3.4bn Recovery Ffund aimed at increasing employment.

The fund will be targeted to boost domestic demand.

While the VAT rate for hospitality will be reduced to 9% from November 1st.

The Temporary Wage Subsidy Scheme (TWSS), or a similar scheme, will also remain in place to the end of 2021.

Finance: Main points

  • The total budget package will be €17.75bn - €17bn in expenditure and €270m in taxation
  • A deficit of €21.5bn is to be recorded this year
  • Some €8.5bn will be spent on public services - including €2.1bn on contingency funding - with capital spending to increase by €1.6bn
  • There will be a €3.4bn Recovery Fund be aimed at increasing employment
  • A pack of 20 cigarettes will increase by 50c, with a pro-rata increase on other tobacco products
  • The Temporary Wage Subsidy Scheme, or a similar scheme, will in place to the end of 2021. The Government is to apply to the SURE EU fund to support this
  • A new COVID Restrictions Support Scheme is to provide targeted support for businesses that have temporarily closed because of the pandemic
  • The VAT for hospitality will be reduced to 9% from November 1st until December 2022
  • The Help-to-buy scheme is being extended until end of 2021 at the higher max rate of €30,000
  • Carbon tax will increases by €7.50 a tonne from midnight
  • Working from home: If an employer makes no contribution, workers can claim a tax deduction for things such as heat, light and broadband
    There will be an extension of the Tax Warehousing Scheme for employers to include those on Temporary Wage Subsidy Scheme - the self-employed can also benefit from this
  • The Section 481 Scheme for the film industry will run until December 31st 2023 at its highest rate of 5%
  • The Knowledge Development Box Relief on intellectual property is being extended until the end of December 2022
  • Work is to begin on a tax credit for the digital gaming sector from January 2022
  • The Accelerated Capital Allowances Scheme for energy efficient equipment is being extended for a further three years
  • No broad changes to income tax credits or bands
  • Stamp Duty Scheme, which refunds a portion of stamp duty paid on acquisition of non-residential land where it is then developed, will be extended until the end of December 2022
  • Changes to the motor tax regime: Rates unchanged for those before 2008. Most pollutant cars impacted
  • Changes to VRT based on emissions, which is aimed at incentivising people to buy low emission cars
  • An extension of Stamp Duty Relief for the transfer of agricultural land to family members until December 2023
  • No change to the 12.5% of Corporation Tax
  • Change to Capital Gains Tax Entrepreneur Relief so that anyone who has owned at least 5% of the shares for continuous three years will qualify for relief

Expenditure: Main points

  • An extra €4bn is being allocated to the health service: This will see an extra 1,146 actue beds, an increase in critical care beds to 321 by end of the year
  • There will also be five million extra homecare hours
  • €5m for the development of community-based dementia supports
  • €50m for new drugs and €25m for Healthy Ireland and National Drugs Strategy
  • €38m is being allocated for mental health services 
  • There will be €100m available for new disability services 
  • There will be €500m in additional expenditure for businesses, in addition to other tax measures announced
  • A commercial rates waiver is being extended for the final quarter of this year
  • An additional €44m is being invested into Irish Water for infrastructure
  • €80m extra is being made available for the School Building Programme, ICT and minor works scheme for the Department of Education
  • €270m is being made available for Higher Education building projects
  • An extra €20m is being made available for disability services through the Transforming Lives programme
  • €10m in funding for voluntary hospices this year
  • The Department of Education will have an €8.9bn budget: €2bn of that will be put towards children with special education needs with 900 additional SNAs and 403 additional teachers
  • There is a to be a reduction in the pupil-teacher ratio by 1 to 25:1 in primary schools, by providing more than 300 posts
  • SUSI grant for postgraduates will rise by €1,500 to €3,500 and the income eligibility threshold has been changed
  • €340m of voted expenditure will be spent on Brexit supports in 2021 - including money for ports and airports. and 500 staff for customs
  • Capital spending is to get another €600m - total capital expenditure will rise to over €10bn for the first time ever
  • Ireland has signed up to EU advance purchase agreements for potential COVID-19 vaccines
  • The Government is to purchase 41 additional InterCity railcar carriages and sign contracts with a potential for up to 600 electric carriages as part as DART+
  • €131m is to be made available for Defence Forces capital expenditure
  • There will be €10m available for Cork and Shannon Airports
  • €500m is to be made available for capital expenditure on housing for 9,500 new social housing units in 2021
  • There will also be €65m available for deep retrofitting of existing social housing
  • Road construction will also take place on N56 in Donegal, N4 in Sligo, N5 in Mayo, and the N22 and Dunkettle interchange in Cork
  • Some €22m has been announced for homelessness programmes, including additional beds
  • There will also be an expansion of Housing Assistance Payment (HAP) Scheme tenancies, with 85,000 tenancies supported through next year
  • The Land Development Agency will have €1.2bn of funding available to deliver nearly 9,000 affordable housing and cost rental over the next few years
  • There will also be €1.1bn available to the Department of Enterprise for the Credit Guarantee Scheme, LEO supports and developing R&D
  • There is also €55m for a tourism business support scheme and €5m for toruism product development
  • An extra €4m is being made available for the Gaeltacht and Irish language
  • An additional €100m of carbon tax revenue will be put towards energy efficiency of homes - and there will be increased deployment of electric cars across the public service
  • Social welfare rates to be maintained in 2021
  • There is to be an increase in the Living Alone Allowance of €5 to €19
  • The Fuel Allowance is going up by €3.50 a week to €28
  • Children's Benefit is increasing by €5 for over-12s and €2 for under-12s
  • There is also an increase in the Carers Support Grant by €150 to €1,850 a year
  • A Christmas bonus is to be paid to those on the Pandemic Unemployment Payment and other welfare if they have been on that for four months, instead of usual 15 months
  • Parents Benefit is to be extended by a further three weeks
  • The self-employed who are on the Pandemic Unemployment Payment can take up some freelance work and not lose their benefit
  • A planned pension age increase in January 2021 will not now proceed
  • The Department of Agriculture is to receive €179m extra in funding - with a 7% increase for rural affairs including the Town and Village Renewal Scheme
  • Some €5m is to be made available for new digital hubs in rural Ireland
  • There will also be funding for 620 new Garda recruits and 500 new civilian staff
  • Funding is also to be made available for the inquest into the Stardust tragedy
  • The Department of Children and Youth Affairs will see a €120m increase in funding, including €61m for Tusla

The Department of Finance is forecasting a total loss of 320,000 jobs in 2020, with a recovery of 155,000 jobs next year.

How will this affect me?

There are a few areas where people will notice a direct impact from Budget 2021.

Firstly, income tax rates are not going changing either up or down in this budget.

But there are a number of areas that will hit your pocket, namely around motoring.

A €7.50 a tonne increase in carbon tax will hike the cost of fuel.

Filling a tank of diesel will cost about €1.50 more, a tank of petrol will add on €1.30.

There will be 90c extra on a bag of coal, 20c on a bale of briquettes and home heating oil is set to increase.

Budget 2021 live blog

This will be offset for the most vulnerable by increases in the Living Alone Allowance and the Fuel Allowance.

Changes to VRT will make buying a polluting car more expensive - and changes to motor tax means those with older or more polluting cars will end up paying somewhere between €10 and €50 more a year.

Though 90% of people will not be impacted by the motor tax changes.

Full-time, third level students will all be given a €250 cash sum by the Government to help them this year.

And the cost of a pack of cigarettes is going up 50c, but alcohol is being left unchanged.

In short: if you smoke and drive a big, old car this budget will cost you.

But the reality is that despite this being the largest budget in the history of the State, it will not produce a massive change for most people.

Read the speeches in full here

Main image: Minister for Finance Paschal Donohoe arriving at Government Buildings for Budget 2021. Picture by: Sasko Lazarov/RollingNews.

Share this article

Read more about

Brexit Budget 2021 Carbon Tax Cigarettes Covid-19 Diesel Income Tax Living Alone Allowance Motor Tax Paschal Donohoe Petrol Students

Most Popular