Budget 2021 unveiled a package worth €17.5 billion, unprecedented in its scale and designed to offer a critical lifeline to struggling businesses.
There was some good news for the self- employed: an increase to the earned income tax credit; an extension of the debt warehousing scheme and the Covid Support Grant; and, the ability for some earning whist in receipt of PUP.
Government has recognised that the self employed may struggle to pay preliminary tax based on this year’s income and that they need to keep the show on the road.
Summary of Budget 2021 benefits to help the self-employed:
– Increased Tax Credit
The self-employed are set to benefit from increased tax credits. The Earned Income Credit has been raised €150 to €1,650 for 2021 and will also apply retrospectively for 2020. The increase means a self-employed person can receive an extra €750 in income before they pay tax. This changes brings the self-employed tax credit in line with PAYE workers.
– Debt Warehousing
Recognising that not all self-employed can benefit from the provisions introduced in the July Stimulus Programme and that they may struggle to pay their 2019 balance and preliminary tax for 2020, Government announced an extension of the Debt Warehousing Provisions for a period of a year at 0% interest. A rate of 3% will apply thereafter and there would be no surcharge. The provision will be extended to include the 2019 balance and 2020 preliminary tax.
– Earning while in receipt of PUP
Self-employed recipients of the Pandemic Unemployment Payment (PUP) will be able to earn up to €480.00 per month without loosing their payment. This was introduced to allow self-employed in affected sectors take up some intermittent work without losing their entitlement to PUP.
– Covid Enterprise Support Grant payments
The Enterprise Support Grant is available to assist eligible self-employed recipients who closed their PUP on or after 18 May 2020. It provides business owners with a once-off grant of up to €1,000 to restart their business closed due to the COVID-19 pandemic. The grant has been extended until 31 March 2021. Eligibility and application form available here.
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