Donegal Daily’s financial columnist Sean McNulty has gone through today’s budget and picks out the stand-out moves by the Government to put more money in your pocket.
If the news you have been hearing today is that this budget is substantial, you’ve heard right. It is the most prosperous Budget delivered in quite some time.
Some are calling it a “two in one budget”, because the government is both increasing benefits and cutting taxes, which of course cannot go on for long…but let’s enjoy it while it’s here and see what it all means.
Why are the government doing this? So that they can boost the economy into a larger growth in 2023 than would be predicted without these measures. My job is to put that budget into real terms. What does it mean for you specifically? I have organised the summary of measures into categories below that should make the information easier to consume.
Take for example a family of 5 with one child at college and both parents earning €40,000 – the house is better off to the tune of €3,310 through the main budget measures. Now this is a single example and doesn’t apply to all. Hopefully through the summary below you can decipher your own benefits but if you are having trouble, please do reach out to me directly.
A lot of talk is around the booster package of €4.1bn which has been set aside for a series of one-off measures aimed specifically at boosting people’s income and the economy. I summarise these below going by who they relate to…
- Families
- Every household will get €600 in electricity credits dished out in three payments of €200: the first coming before Christmas and two more in the new year
- There will be a double child benefit payment in November. So, €140 per child on top of the usual payment received.
- There will be €500 extra for those on the Working Family Payment which will be paid in November. Also, the Working Family Payment thresholds will increase by €40 across all family sizes.
- There is to be a 25% cut to childcare costs.
- From next September all primary school pupils will get their schoolbooks for free, benefiting more than 500,000 pupils
- Healthcare
- Hospital inpatient charges are going to be removed for all public patients.
- Free GP care will be extended to more than 400,000, with 6 and 7 year olds to gain access by the end of this year.
- Free contraception will be extended to women aged up to 30. (and also available from age 16 now instead of 17)
- A State-funded IVF scheme will be started.
- Cigarettes are going up by 50c from midnight tonight. Alcohol is untouched.
- Students
- There will be €1,000 off the student contribution this year only (it will come down €500 from next year onwards)
- There will be a €1,000 increase for postgraduate student grant.
- A double monthly payment of SUSI maintenance grants will be made in December and the Student Grant itself will increase by between 10% and 14% from September 2023.
- Those receiving welfare payments
- A lump sum of €400 will be paid to fuel allowance recipients before Christmas
- A double week cost of living support payment to social welfare recipients in October
- Thesocial welfare Christmas bonus will also be paid in early December
- €500 extra for those on carers support grant via a payment in November
- €200 for those on Living Alone Allowance is being paid before Christmas
- A once-off €500 payment coming in November for those on disability allowances, invalidity pension and the blind pension.
- Personal rates of socialwelfare will rise by €12 from January 2023, with a proportionate increase for qualified adults and people on reduced rates of payment.
- The top up paid to people on CE, TÚS and the Rural Social Scheme will increase by €5.
- The Domiciliary Care Allowance will be increased by €20.50 per month and will be available to parents whose child is in hospital for up to 6 months.
Oh yeah, and public transport reduction fare stays in place until end of 2023, but not benefiting many in Donegal, let’s be fair.
The government announced that the cut on excise duty on petrol of 21c per litre, and diesel 16c per litre is to remain in place. These are all temporary measures until Feb 2023. There is however a carbon tax rate increase is going ahead increasing each litre of petrol and diesel by 2c.
As well as the large amount of one-off measures put in place some of the Permanent measures are also kind to your take-home pay.
Workers
- The national minimum wage will increase by €0.80 to €11.30 per hour (January 2023).
- The standard income tax rate cut-off point has been increased from €36,800 to €40,000. Meaning if you earn over €40,000 you will be better off to the tune of €640.
- People in employment generally get two tax credits; a personal employee and the PAYE credit. Both are being increase by €75 (to €1,775) meaning you’ll pay €150 less in income tax going forward, thanks to this measure.
So tax just got a whole lot simpler; if you earn over 40k, multiply the first 40k of your salary by 20% and the rest by 40% then take away your tax credits. if you earn under 40k, multiply your salary by 20% then take away your tax credits.
Renters can avail of a new tax credit of €500 being introduced from next year. They will be able to claim back for this year also.
The Help-to-Buy scheme has been extended by two years to the end of 2024. This is for first-time home buyers, buying or building a new property. It allows you to reclaim up to €30,000 in taxes paid, to fund the purchase/build cost of your home. Note that another incentive, the First Home Scheme, was announced recently too that further assists first time buyers by entering an equity share arrangement with the government. “
The tax-free bonus employers can give out every year, increases to €1,000.
So a huge amount of benefits for everyone across the economy, and very little need for commentary from me. If you need help deciphering what it means for you or what you can do with the extra benefits, please contact me via the email below.
Sean McNulty is the founder and Managing Director of Rethink Money Ltd, a financial advisory company based in Letterkenny. Sean’s company is a digital-first advisor with a bespoke software to help clients best manage their financial needs. Free financial reviews can be booked by messaging info@rethinkmoney.ie or booking via the website www.rethinkmoney.ie