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Paschal Donohoe and Michael McGrath ahead of yesterday's announcement Sasko Lazarov/
in your pocket

Budget 2021: What measures kick in today?

A number of changes have already kicked in since yesterday’s announcement.

THE NEW GOVERNMENT unveiled its first Budget yesterday, the largest in the history of the State, which aims to help the economy recover from the effects of the Covid-19 pandemic.

Although the new measures primarily deal with what will happen next year, a number of changes have already kicked in – since the Budget was announced, there have been increases in the price of petrol and cigarettes.

A lot of what was announced yesterday was expected, with no shortage of reports about the measures set to be introduced, but many still wondered when they would feel the changes in their pocket.

Now that the Budget has been delivered, here’s what measures come into effect today and which ones will kick in at a later date.

Carbon Tax

In line with a commitment set out in the Programme for Government commitment, a carbon tax increase of €7.50 – from €26 to €33.50 – per tonne of CO2 emitted was announced.

The increase will apply to motor fuels from today, but will not affect other fuels (like the ones used to heat your home) until 1 May next year.

It is the second year in a row the carbon tax rate has increased. Last year saw a €6 rise from €20 per tonne of CO2 emitted. 


The price of cigarettes increased by 50c at midnight.

A packet of cigarettes in the most popular price category now costs €14. There will also be a pro-rata increase on other tobacco products. 

For another year, no excise duty on alcohol was announced. 

Weekly rebates for businesses

A new scheme for businesses most impacted by the pandemic, such as pubs and hotels, will also kick in from today.

The scheme, which will operate when Level 3 or higher of the Covid roadmap is in place, will see businesses receive weekly payments of up to €5,000 if they are forced to close or effectively close because of prohibited or restricted assess by customers.

The rebates will be based on average 2019 weekly turnover, and will be paid in addition to the Employment Wages Subsidy Scheme (EWSS). 

Those who meet the criteria have been urged to contact the Revenue Commissioners as soon as possible, and it’s expected the first cash payments will be made by mid-November.

Kicking in before the end of the year…

Christmas bonus

The Christmas bonus – including to some self-employed people on the Pandemic Unemployment Payment – will be paid in December. 

The bonus is paid to many of those on social welfare and was cut during the economic crash, before being incrementally restored in recent years, reaching 100% in 2019.

Self-employed workers will be able to continue earning up to €480 per month – or €120 a week - without losing access to the Pandemic Unemployment Payment.

Anyone getting the payment for four months up to December will receive the bonus.

VAT reduction

The Government announced that a reduced rate of VAT for the hospitality and tourism sector to 9% – down from 13.5% – will take effect from 1 November.

The move repeats a cut implemented to help out the sector (one of the hardest hit by Covid-19) during the economic crash a decade ago, and will last until the end of 2021.

Kicking in next year… 

January 2021

A €2 increase in the Qualified Child Payment for children aged under 12 and a €5 increase for children aged 12 and over will kick in from January next year.

The Living Alone Allowance will also increase by €5, from €14 to €19, while Fuel Allowance will rise by €3.50, from €24.50 to €28 per week.

A €1,000 support grant to provide supported employment services for jobseekers with a disability will also be introduced in January.

Meanwhile, a new form of Motor Tax will be introduced for cars registered after that date.

The new tax on vehicles will instead take account of the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) emissions system.

Speaking in the Dáil yesterday, Finance Minister Paschal Donohoe said the new regime will be based on emissions performance levels “which are much closer to real world performance levels than is currently the case”.

“We have strengthened the environmental rationale of the VRT regime to encourage motorists who are in the market for a new car to make greener choices,” he added.

April to December

The Employment Wage Subsidy Scheme, currently set to expire on 31 March, will continue in some form beyond that date, with Donohoe saying a similar scheme would be needed until the end of the year to provide businesses with greater levels of certainty.

The Government is also putting in place a Recovery Fund for businesses of €3.4 billion in light of the threat posed by Brexit.

Public Expenditure Minister Michael McGrath announced an additional 2,100 posts in the school system, including another 990 new special needs assistants (SNA), which will likely be available for the new school year next September. 

A further €20 million has also been allocated to ensure students impacted by Covid-19 have access to supports through the SUSI grant system ahead of the next academic year.

The SUSI fee for postgraduate study will also increase by €1,500 to €3,500 ahead of next September.

You can read back on our in-depth coverage of Budget 2021 here. 

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