Minister for Finance Paschal Donohoe (pictured) has announced a new tax measure to support remote working.
In his Budget 2022 speech, he said that there would be an income-tax deduction amounting to 30% of the cost of vouched expenses for heat, electricity and broadband incurred while working from home.
The details will be formalised in legislation through the Finance Bill. The minister added, however, that the measure would be kept under review, from the perspective of its interaction with policies on climate change.
Land tax starts at 3%
Minister Donohoe also announced details of a Zoned Land Tax, which will replace the levy on vacant sites when it comes into operation. It is aimed at encouraging the use of land for building homes.
He said that the tax would apply to land that had been zoned suitable for residential development, and serviced, but had not been developed for housing.
The rate will be 3%, but the minister indicated that he would be open to reviewing this in future. There will be no minimum size exclusion.
There will be a two-year lead-in time for land zoned before January 2022, and a three-year lead in time for land zoned after January 2022.
The minister also decided that the Help-to-Buy scheme would continue at the current rates.
VAT rate for hospitality stays
The budget also includes an income tax package of almost €520 million, with an increase in the standard rate band by €1,500, and a €50 rise in the personal-tax credit, employee-tax credit, and earned-income credit.
The ceiling of the second Universal Social Charge (USC) rate band will be increased from €20,687 to €21,295.
While this will benefit all workers whose income is above that amount, it is mainly aimed at protecting the incomes of those on the minimum wage. The minimum wage is to increase by 30 cent to €10.50 an hour.
The reduced VAT rate of 9% for the hospitality sector will remain in place to the end of August 2022.
Minister Donohoe also pledged further help for the aviation sector, by using the Finance Bill to amend the taxation arrangements that apply to international air crews under section 127B of the income tax code.
He also announced that the Employment Wage Subsidy Scheme (EWSS) – introduced to support employment during the pandemic – would continue until 30 April 2022. There will be no change in the rates in October or November, but they will gradually fall after that.
The scheme will close to new employers from 1 January 2022.