Budget 2022 was announced last week, with a package of some €4.7bn. The key tax measures announced amounted to €0.5bn of the package. Some of these were of particular interest for farmers.
Tax bands and tax credits
It was the first time since 2018 that the Government changed the tax bands, while tax credits have not changed since 2011.
In Budget 2022, the standard rate of tax was increased by €1,500, which means, from next year, a single person can earn up to €36,800 at the lower income tax rate of 20%. Once the earnings exceed this amount, the higher rate of 40% becomes payable.
The standard tax credits - such as the personal tax credit, employee tax credit and earned income tax credit for the self-employed - have all risen by €50.
With USC, the ceiling of the second band will increase from €20,687 to €21,295, which means you can earn up to €21,295 at the 2% USC rate before having to pay the 4.5% rate.
The USC exemption for those with medical cards and the over 70s earning €60,000 or less is being retained.
However, as per the consumer price index, over the past 12 months, transport costs have increased by 10.2%, while housing, water, electricity, gas and other fuels have all risen by 7.3%. National property prices were up by 9% in July.
Energy costs and fuel allowance
Based on these continuous energy price increases, the budget’s fuel allowance was of keen interest to many. There was an increase of €5 announced which will take place immediately, which will now be a total of €33 per week.
This allowance helps older people or those on limited financial means with winter heating bills.
It is paid over 28 weeks, basically half the year. This year, the payment started on 27 September and will continue until 10 April 2022.
At the increased rate of €33, that would amount to a total of €924 to help towards rising heating costs. The allowance can be paid weekly or in two lump sums, one in September and one in January.
The changes in the carers allowance announced is the first major reform of this allowance in 14 years.
The means test for carers will be broadened to allow couples with a weekly income of up to €750 and single people with an income of €350 to receive the payment. The rate will increase by €5 per week from the first week in January.
There was also a change in the disregard (the amount of savings ignored by the means test) for savings announced.
Up until now, anyone with more than €20,000 in savings or investments saw the income from those accounts reduce any carer’s allowance payment. This threshold has now been increased to €50,000, but will only apply from June 2022.
Anyone in receipt of a carer’s allowance can also qualify for a free travel pass.
There is also a household benefits package available, which means a free TV licence and €35 per month off either gas or electricity bills, if receiving a carers allowance and living with the person receiving the care.
Budget 2022 has benefited pensioners, by giving those on the full State pension an increase of €5 per week, as well as increases in the fuel allowance, and the living alone allowance.
A 71-year-old retired man or woman who has a small private pension (such as €4,000 per year) and who also qualifies for the full State pension, living alone allowance and telephone support allowance will be €555 better off after tax under Budget 2022.
Budget 2022 has some benefits for the most vulnerable in our communities.