Budget 2021: The main points 

Budget 2021: The main points 

Minister for Public Expenditure and Reform, Michael McGrath and Minister for Finance Paschal Donohoe pictured at Government Buildings for Budget 2021. Picture: Julen Behal

Finance Minister Paschal Donohoe has delivered Budget 2021 in the Dáil.

Here are the main points of what was presented to Government.

Main points

  • Total budget package will be €17.75 billion - €17 billion in expenditure and €270 million in taxation Deficit of €21.5 billion or 6.2% to projected for 2020.
  • Deficit of €20.5bn forecasted next year €8.5 billion for Covid support; €2.1 billion of Covid funds will be held in contingency Capital spending to increase by €1.6bn €3.4bn recovery fund. This will be aimed at increasing employment.
  • €340 million of voted expenditure will be spent on Brexit supports in 2021. That includes money for ports and airports and 500 staff for customs.
  • Capital spending to get another €600m. Total capital expenditure will rise over €10 billion for the first time ever.
  • New multi-annual capital funding of €500m over five years for a Shared Island Initiative


    • An extra €4 billion for the health service 
    • Ireland has signed up to EU advance purchase agreements for potential Covid vaccines 
    • An extra 1,146 acute beds; increase in permanent adult critical care beds to 321 by end of year from 255 pre-Covid; 1,250 community beds in 2021 including 600 new rehabilitation beds 
    • Five million extra homecare hours 
    • €5 million for development of community based dementia supports 
    • €50m for new drugs and €25m for Healthy Ireland and National Drugs Strategy 
    • €38m for mental health under Sharing the Vision 
    • €100m for disability new services 
    • 16,000 health sector posts 
    • An extra €20 million for disability services through transforming lives programme €10 million in this year funding for voluntary hospices


    • The ceiling for the second USC rate adjusted up to €20,687 Weekly threshold for higher rate of employers PRSI will go from €394 to €398 
    • Self-employed income tax credit to rise by €150 to €1,650 
    •  Increase in the Dependent Relative Tax Credit by €70 to €245 
    • Pack of 20 cigarettes increase by 50c. Pro-rata increase on other tobacco products. €14 now for most popular pack of cigarettes 
    • Carbon tax increases by €7.50 a tonne from midnight 
    • Changes to Vehicle Registration Tax (VRT) based on emissions which is aimed at incentivising people to buy low emission cars. 
    • Current VRT reliefs for hybrids will be allowed to expire in light of the new rates system 
    • Changes to the motor tax regime. Rates unchanged for those before 2008. Most pollutant cars impacted 
    • No change to the 12.5% rate of corporation tax 
    • An additional €100m of carbon tax revenue will be put towards energy efficiency of our homes



    • Increase in the Living Alone allowance of €5 to €19 
    • Fuel allowance up by €3.50 a week to €28
    • The qualified child payment for over-12s is rising by €5 and by €2 for under-12s
    • Increase in carers support grant by €150 to €1,850 a year 
    • Parents Benefit to be extended by a further three weeks 
    • Rise in pension age to 67 on 1 January 2021 will no longer go ahead 
    • Self-employed on PUP can take up some freelance work and not lose their benefit 
    • Christmas bonus to be paid to those on PUP and other welfare if they have been on that for four months instead of usual 15


    • Department of Education will have an €8.9bn budget; €2bn of that will be put towards children with special education needs; 900 additional SNAs and 403 additional teachers 
    • €80 million extra for school building programme, ICT and minor works scheme for Department of Education 
    • €270m for Higher Education for 20 building projects 
    • Reduction in the pupil teacher ration by 1 to 25:1 in primary schools by providing more than 300 posts 
    • €3.3bn budget for Higher Education Department; about 5,000 places for demographic changes arising from calculated grades 
    • SUSI grant for postgraduates will rise by €1,500 to €3,500 and income eligibility threshold has been changed.
    • €50m fund to give all third-level full time students €250 Social welfare rates to be maintained in 2021


    • There will be a new Covid restrictions support scheme to provide targeted support for businesses that have temporarily closed because of the pandemic 
    • VAT for hospitality will be reduced to 9% from November 1st until December 2021 
    • Section 481 scheme for film will now run until Dec 31st 2023 at its highest rate of 5% 
    • Capital investment of €10.1 billion in 2021 
    • €500m in additional expenditure for businesses in addition to tax measures 
    • Commercial rates waiver extended for final quarter of this year at cost of €300m 
    • 10,000 upskilling opportunities and 4,000 new apprentices 
    • €1.1bn to department of enterprise 
    • €55m for a tourism business support scheme and €5m for tourism product development


    • €10m for Cork and Shannon airports 
    • An additional €44 million for Irish Water for infrastructure 
    • Construction on N56 in Donegal, N4 in Sligo, N5 in Mayo, N22 and Dunkettle interchange in Cork 
    • Purchase 41 additional InterCity railcar carriages and sign contract with potential for up to 600 electric carriages as part as DART+ 
    • €132m for National Broadband Plan 
    • Additional €1bn for public transport in 2021 
    • Increased deployment of electric cars across the public service


    • Help to buy scheme extended until end of 2021 at the higher max €30,000 rate 
    • Stamp Duty scheme which refunds a portion of stamp duty paid on acquisition of non-residential land where it is then developed will be extended until end Dec 2022 
    • Extension of stamp duty relief for the transfer of agricultural land to family members until Dec 2023 
    • €5.2bn for Department of Housing - increase of €773 million on 2020 
    • €500m for capital expenditure on housing for 9,500 new social housing units in 2021 
    • €65m for deep retrofitting of existing social housing 
    • Expansion of HAP tenancies; 800 more rental accommodation scheme tenancies; 85,000 tenancies supported through next year 
    • €22m for homelessness programmes including additional beds 
    • €110m for affordable housing package for affordable and cost rental 
    • €210m under Rebuilding Ireland Home Loan scheme 
    •  The Land Development Agency will have €1.2 billion of funding available


    • €131m for Defence Forces capital expenditure 
    • 620 new garda recruits; 500 new civilian staff 
    • Funding for the inquest into the Stardust tragedy 
    • Further ICT for the Gardaí and courts services under €258m for them 
    • Forensic Science Lab and redevelopment of Limerick Prison funded 
    • €120m increase for Department of Children including €61m for Tusla 


    • People working from home will be able to claim tax deductions on utilities such as a light, heating and possibly broadband.
    • In cases where the employer makes payments towards the expenses of working from home, up to €3.20 may be paid to employees.
    • Where the employer does not make a contribution, the worker may claim a tax deduction for utility expenses, which may include broadband.


    • €14m extra for the Gaeltacht and Irish language to €78m 
    • €50m for live entertainment supports and arts council funding 
    • €36m for Sport Ireland, €7m for large scale sports infrastructure, €2m for major sporting events 
    • €179m extra for Department of Agriculture; funding to include controls on agri-food exports and imports to/from the UK post Brexit 
    • 7% increase in budget for rural affairs including town and village renewal scheme 
    • €5m for new digital hubs in rural Ireland 
    • €29m for heritage sites

    'From the ashes of the pandemic together we will build a stronger, more resilient Ireland'

    Beginning his address, Mr Donohoe said: "The test we face, further demanding challenges await. The challenge is great and yet we will prevail, from the ashes from this pandemic we will build a stronger and more resilient Ireland."

    He said that the Budget has been decided on the assumption of the continued presence of the virus in our country and the absence of a broadly available vaccine.

    Mr Donohoe said Ireland had faced numerous difficulties since independence but never one like Covid-19, “an invisible enemy that has caused great suffering and disrupted so much of what is central to our wellbeing”.

    “Yes, the test we face is daunting, further demanding choices await,” he said.

    “Yes, the uncertainty and anxiety about the future of lives and livelihoods is great, and yes we will prevail.

    "We will come through this. And from the ashes of the pandemic together we will build a stronger, more resilient Ireland."

    The Fine Gael minister said the total value of support measures to date amounts to €24.5 billion, nearly eight times last year’s Budget plan.

    Paschal Donohoe said Ireland had never responded to a challenge like this in modern times but equally the country had never delivered “such a strong response”.

    The Finance Minister highlighted the importance of international cooperation in responding to the threat of the pandemic.

    “We are responding to a virus that knows no borders. So it is imperative that we have a response that transcends international borders.

    “This is why the importance of collective responses to international problems is clear – no one country can act in isolation.” He cited the role the European Union has played in the crisis, namely the European Central Bank’s €1.25 trillion pandemic bond purchasing programme and the 2 trillion euro recovery plan.

    “Economic interdependence combined with political purpose is a source of strength. All of these European decisions strengthened our national response,” he said.

    “Budget 2021 is a bridge to that better future.”

    He cited the role the European Union has played in the crisis, namely the European Central Bank’s €1.25 trillion pandemic bond purchasing programme and the €2 trillion recovery plan.

    “Economic interdependence combined with political purpose is a source of strength. All of these European decisions strengthened our national response,” he said.

    Donohoe is anticipating that there will be no bilateral trade deal between the UK and the EU, which will reduce growth by an estimated 3%, to 1.75%.

    Minister Donohoe concluded his speech saying: "There is hope and we will come out of this crisis. 

    He then quoted Seamus Heaney, saying: "If we winter this one out, we can summer anywhere".

    'Government won't always get it right, but will act in the best interests of the people'

    Michael McGrath, Minister for Public Expenditure and Reform began his address paying tribute to frontline workers across the country.

    Mr McGrath said he and Minister Donohoe wanted to give people hope based in realism.

    "The day will come when Covid-19 and Brexit are behind us.

    "A new economy, a green economy will emerge, and so too will a greater understanding of how much we rely on each other and so will a greater appreciation of the simple things that perhaps we often took for granted."

    He added: "Government won't always get it right, but will act in the best interests of the people."

    The Public Finance Minister said the Budget would see public expenditure increase by €17.4 billion over and above the planned expenditure for 2020 pre-Covid.

    Some €8.5 billion is being provided for Covid-19 supports.

    The Fianna Fáil TD said he was “making available an unprecedented extra €4 billion for our health service”.

    Mr McGrath said the additional four billion euro allocated to health will provide capacity for 100,000 Covid-19 tests per week and supply PPE.

    It will also allow for the creation of 1,146 extra acute beds and it will increase permanent adult critical care beds from 255 pre-Covid to 321 by the end of next year.

    The minister also announced 1,250 community beds for next year, including more than 600 new rehabilitation beds and five million additional homecare hours.

    Mr McGrath said €5.2 billion will be allocated to the Department of Housing – an increase of €773 million on 2020, which he said was a “record level of funding”.

    Some €500 million is being made available to facilitate the construction of 9,500 new social housing units in 2021.

    A total of 12,750 units will be added to the social housing stock including leased units.

    There will also be a total of €65 million available to fund deep retrofitting of social housing stock.

    Concluding his address, Mr McGrath said: "We do not have to look far into our history for great uncertainty, what is common across these periods is we have always come back stronger.

    "The journey is uncertain we must not lose faith. This government will do everything in to protect our people."

    Additional reporting by Press Association

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