On Thursday 23 July 2020, the Irish government announced details of the keenly awaited Jobs Stimulus plan.
From a tax perspective, the key proposals are as follows:
- Employment Wage Support Scheme (“EWSS”) – The current Temporary Wage Subsidy Scheme (“TWSS”) will be replaced by the EWSS. It is expected to run until April 2021. It is proposed that EWSS will operate by providing employers a flat-rate subsidy of up to €203 per week per employee where the employers turnover has fallen by 30%.
- Pandemic Unemployment Payment (“PUP”) – The PUP scheme was due to expire at the end in August 2020. However, it is now being extended to 1 April 2021. It is proposed that between now and April, there will be a gradual reduction in the PUP payment level, linked to previous incomes, bringing payments in line with existing social welfare levels over time. It is intended that the PUP scheme will close to new claimants from Thursday 17 September 2020.
- Stay and Spend Initiative – Under this initiative, any taxpayer spending over €625, on accommodation, food and non-alcoholic drinks, between October 2020 and April 2021, may claim back €125 through a tax credit.
- Use of tax losses - With a view to providing immediate cash-flow support to previously profitable businesses, the rules relating to the carrying back of trading losses are being changed to enable such businesses more quickly carry back such losses against profits of an earlier accounting period/tax year. It is intended that this will result in an immediate refund of some or all of the tax paid in respect of the earlier accounting period/tax year.
- Self-employed – It is proposed that a new income tax relief will be introduced for self-employed individuals who were profitable in 2019 but, as a result of the COVID-19 pandemic, incur losses in 2020.
- VAT – The standard rate of VAT will be reduced for a six-month period commencing on 1 September 2020 from 23% to 21%.
- Help to Buy Scheme - Enhanced levels of support will be made available under Help to Buy scheme until December 2020.
- Debt Warehousing Scheme – As expected, the government announced that it will produce legislation to underpin this scheme which was announced earlier in 2020 as part of the government’s Covid 19 response.
- Reduction in late tax payment interest rate – To support taxpayers experiencing difficulty with tax liabilities, the late payment rate of interest applying to agreed repayments of all tax debt is to be reduced to 3%, where agreement has been reached with Revenue before 30 September 2020.
- Cycle to Work Scheme – It is proposed to increase the allowable expenditure under the scheme from €1,000 to €1,500 in respect of "ebikes”, and to €1,250 in respect of other bicycles.
The above initiatives are to be welcomed, although the effects of their full impact remain to be seen. We also await more detail and legislation to underpin the proposals.
If we can be of assistance in relation to any aspect of the above, or if you have any other tax related queries, please don’t hesitate to contact me, or your usual Smith & Williamson tax contact.
We have taken great care to ensure the accuracy of this publication. However, the publication is written in general terms and you are strongly recommended to seek specific advice before taking any action on the information it contains.
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Tax legislation is that prevailing at the time, is subject to change without notice and depends on individual circumstances. Clients should always seek appropriate tax advice before making decisions. HMRC Tax Year 2022/23.