Budget 2021: Cashback for firms to combat Covid-19 crisis 

The minister did follow through on the commitment to increase the earned income credit for the self-employed. Picture: Andy Gibson

Paschal Donohoe, the finance minister, presented perhaps his most important Budget to date after a year that has pitched the country into isolation, the economy €21bn into the red, and businesses into defending their operations and their people. 

The focus was, as expected, on supporting business and employees, and the budget announced an unprecedented level of expenditure focused on getting businesses and employers through the rest of 2020 and 2021.

It is very welcome to see that the minister committed to extending wage supports until the end of 2021. A similar scheme to the current EWSS — the employment wage subsidy scheme — will be in place until the end of 2021. At a time when every cent counts, this will be a huge relief to companies.

An extension of the tax warehousing scheme was announced, and this will include repayments of temporary wage subsidy scheme funds owed by employers and preliminary tax obligations for adversely affected self-employed individuals. This will allow for a deferral of payments for one year with no interest cost.

Mr Donohoe announced a new Covid-19 restrictions support scheme. This scheme provides for cashback for businesses significantly impacted or closed because of the health restrictions. For these businesses, the Government will make a payment, based on their average weekly turnover for 2019. The scheme will be administered by Revenue, and will provide a maximum refund of €5,000 per week in cash to businesses whose turnover is down at least 80% on the corresponding period last year because of restrictions. 

Before the budget, there was significant lobbying from the tourism and hospitality industry for a reduction in the Vat rate. Mr Donohoe has announced that a reduction in the rate to 9% to apply from November 1 will be in place until the end of 2021. Businesses can avail of 100% year one capital allowances for energy-efficient equipment. 

While there were no significant changes to income tax, the minister did follow through on the commitment to increase the earned income credit for the self-employed. 

In further relieving and important measures for SMEs, Michael McGrath announced a waiving of commercial rates until the end of the year as well as further restart grants and other financial support schemes.  

Nicola Quinn is tax partner at PwC Cork