Budget 2022 Highlights

From a retirement planning perspective there were no significant changes to the private pension system announced in yesterday’s budget. However, it is possible that there might be some relatively small changes in next week’s Finance Bill. If so, these will likely be focused on addressing some anomalies in some of the structures available (such as PRSAs and AMRFs), rather than changes to fundamental elements of the private pension system such as tax relief and fund thresholds. Unfortunately there has been no attempt to address the pensions inequity between public and private sector workers. 

Please see below for some of the key points within Budget 2022:

• Income Tax Bands

An increase of €1,500 in the income tax standard rate band for all earners, from €35,300 to €36,800 for single individuals and from €44,300 to €45,800 for married couples / civil partners with one earner

An increase of €50 for the following tax credits -Personal Tax Credit, Employee Tax Credit and Earned Income Credit from €1,650 to €1,700

• The 2% USC band increased from €8,675 to €9,283
• Minimum wage will increase to €10.50 (up 30c)
• New zoned land tax of 3% introduced
• Employees working at home will be able to get relief from tax at a rate of 30% on vouched bills
• No change in pension tax relief, the €115k NRE limit, or the €2m Standard Fund Threshold limit
• No change in the insurance levies
• No change in DIRT or life assurance exit tax rates
• No change in CGT or CAT rates. The CAT Thresholds remains as before
• From 1 January 2022 the weekly income threshold for the higher rate of employer’s PRSI will increase from €398 to €410
• Social Welfare
• State Pension has increased by €5pw, and the living alone allowance will increase by €3pw
• Main welfare payments increase by €5pw
• Payment of the Christmas bonus will be paid at 100% of the weekly amount
• Fuel allowance will increase to €5pw
• The Help to Buy Scheme will be extended to end of 2022 at current rates