Here’s everything you need to know about this year's Budget

Recent budgets have focussed on a major theme such as Brexit, Covid, and the recovery from the pandemic.

This year was no different.

With inflation the highest it's been in decades and energy prices at record levels, this year's Budget was all about the cost of living and putting money back into people's pockets. And the Government announced a huge budget package of over €11 billion.

There was almost ‘something for everyone’ and in terms of scale it felt like a giveaway budget akin to those of the Celtic Tiger years. However with prices rising rapidly across the board, rents at record levels, and mortgage rates on the rise, many households may find themselves no better off than they would have been last year. However shielding households from the full effects of the war in Ukraine and the energy crisis was always going to be a difficult task.

As in previous years, many of the announcements had been leaked well in advance meaning Paschal could probably have saved himself a trip to the Dáil!

But in case you missed it, here's a look at the main measures and what it all means for your pocket.

Income tax and USC

Income tax bands and tax credits were increased to help workers keep more of their money.

• The PAYE/employee tax credit and the personal tax credit will both increase by €75 to €1,775 i.e. €3,550 in total. This will save most workers €150 a year or €12.50 a month. 
• The point at which people start paying the top 40% rate of income tax will increase by €3,200 to €40,000 for a single person, however this is still low by international standards. Anyone earning over €36,800 a year will benefit to the tune of €53 a month through this measure alone. The cut-off point for married, one-earner couples will rise by a similar amount to €49,000.
• The earned income tax credit for the self-employed will also increase by €75 to €1,775.
• Income tax and employee PRSI rates will remain the same.
• The 2% USC band will increase slightly to €22,920 to take account of the recent increase in the minimum wage. This will save workers earning above this around €4 a month. 
• The home carer tax credit will increase by €100 to €1,700.
• Employers can now give employees a tax-fee voucher or money card (such as a One4All voucher or Perx Card) for up to €1,000 a year from €500 previously.

Energy 

With gas and electricity prices at record levels, having over doubled since the start of last year, help with energy bills had been well flagged.

A new €600 energy credit will be credited to all households' electricity accounts in three instalments of €200 over the coming months. 

The reduced 9% rate of VAT on gas and electricity bills is also being extended until the end of February. 

However the average gas and electricity bill has shot up by over €2,000 a year in recent times so households will still feel the pinch. 

The Government also said it's continuing to work with the EU at a broader level to look at placing a windfall tax on the profits of energy companies.

The Carbon Tax

The Government has already committed to increasing the carbon tax to €100 per tonne by 2030 so another increase in the tax was almost a forgone conclusion, 

Carbon tax will increase by a further €7.50 to €48.50 per tonne of CO2 from 12th October.

This will increase the price of a litre of petrol and diesel by 2c. However to offset the increase, the National Oil Reserves Agency (NORA) levy which currently adds 2c to every litre of petrol and diesel is being reduced to zero. So the net cost will be zero for motorists.

So what exactly does that mean for your pocket?

Below is an approximate outline of what the tax increase will add to various fuels, as well as the total amount now being paid in carbon tax.

*Based on average annual consumption of 11,000 kWh of gas

**40kg bag

**Based on 900-litre tank

Social Welfare and universal measures 

There will be an across-the-board increase in social welfare payments. The State pension, Jobseekers’ Allowance and other welfare payments will increase by €12 a week from January.  

The Christmas Bonus will be paid to all social welfare recipients in early December. In addition to this, there will be a once-off "Cost of Living" double payment to all social welfare recipients in October also.

A double Child Benefit payment of €140 per child will be paid in November.

The other main social welfare measures announced were:

• Households in receipts of the Fuel Allowance will receive an extra lump sum of €400 before Christmas in addition to their regular weekly payment. The allowance will also be available to more people as the income you’re allowed to earn in order to get it is increasing. See here for more information on the allowance and how to apply for it.
• There will be free primary school books for all children from September next year. 
• A once-off €500 payment will be made to carers and those on disability allowance in November.
• Those in receipt of the Living Alone Allowance will receive a once-off €200 payment in November.  

If you're unsure of any welfare assistance that you might be entitled to, check in with your local welfare office over the coming days.

Housing

The main announcements were: 

• The Help-to-Buy scheme for first-time buyers, which allows for a tax rebate of up to €30,000 to help towards a deposit, has been extended until the end of 2024. You can find out more about the scheme here
• A rent tax credit of €500 is being introduced. This is similar to a rent credit that existed previously (but which was fully discontinued in 2017). Renters can claim the credit for 2022 as well as from 2023 onwards. A tax credit simply reduces your tax liability by the size of the credit. So renters will in essence be given a €500 refund on their annual rent for 2022 onwards. However to claim the credit a renter's landlord must be registered with the Residential Tenancies Board (RTB).

The Old Reliables

It hasn't been a good Budget for smokers (is it ever?).

The excise on cigarettes has gone up by another 50 cent, bringing the price of a pack of 20 cigarettes up to around €16.

The excise on alcohol has remain unchanged. However the introduction of minimum unit pricing on alcohol in January has already seen the price of cheaper alcohol increase significantly.

The reduced rate of excise duty on petrol and diesel will remain in place until the end of February. 

Health

• Overnight hospital charges are being abolished. Currently someone who doesn't have private health insurance or a medical card is charged €80 a night for a hospital stay, up to €800 a year. This is now being removed, bringing Ireland closer to having free universal healthcare. 
• The previously announced extension of free GP care to include six and seven year olds will be implemented by the end of the year.
• Households with a net income of less than €46,000 will qualify for free GP care.
• The free contraception scheme for women will be extended to now include those between 16 to 30 (previously 17-25).
• Cariban, a drug that helps against severe pregnancy sickness, is to be given free of charge for the first time.
• There will be access to publicly-funded IVF treatment for the first time also.

Transport 

The 20% reduction in public transport fares – championed by the Green Party – will be extended by another year at least, saving some commuters hundreds on their annual transport costs.

The Youth Travel Card discount of 50% will be extended by another year too. 

VAT 

The reduced 9% rate of VAT, which largely applies to businesses in the tourism and hospitality sectors (but also applies to a wide variety of consumer services such as restaurants, hairdressers, coffee shops, and cinema and concert tickets) will revert back to 13.5% from next March.

Whether businesses pass on the increase to consumers remains to be seen. 

However VAT will fall to 0% on newspapers, period products, defibrillators, nicotine therapy, and hormone replacement therapy from 1st January 2023. 

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