Month: February 2020

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Minimum Wage Increase 2020

As of 1st February, as set out in the National Minimum Wage Order 2020, Ireland’s minimum wage has increased to €10.10 per hour or part thereof, based on age of employee.

Source citizensinformation.ie

Calculating hourly rate

As stated in the National Minimum Wage Order 2020, the basic calculation is the gross pay is divided by the total number of hours worked.  Your Gross pay should include;

  • Shift premium
  • Bonus
  • Service Charge
  • Board (if applicable, 0.90c per hour worked)
  • Lodgings (if applicable, €23.86 per week or €3.42 per day)

As per the National Minimum Wage Order 2020, it must be clear what pay is taken into account, working hours and the period it covers. Hours worked should take into account overtime, travel (where this is part of the job) and training

The following do not count as pay and cannot be included when calculating the minimum wage;

  • Overtime premium
  • Call-out premium
  • Service pay (tips paid directly to you)
  • Unsocial hours premium
  • Tips which are placed in a central fund managed by the employer and paid as part of your wages
  • Premiums for working public holidays, Saturdays or Sundays
  • Allowances for special or additional duties
  • On-call or standby allowances
  • Certain payments you receive when absent from work, for example sick pay, holiday pay or pay during health and safety leave
  • Payment connected with leaving the employment, including on retirement
  • Contributions paid by the employer into any occupational pension scheme available to you
  • Redundancy payments
  • An advance payment of, for example, salary: the amount involved will be taken into account for the period when you would normally have received it
  • Payment in kind or benefit in kind, other than board or lodgings
  • Payment not connected with your employment
  • Compensation for injury or loss of tools
  • Award as part of a staff suggestion scheme
  • Loan by the employer to you

Entitlement

You are not entitled to the national minimum wage if;

  • Employed by a close relative (i.e spouse, parent) or
  • In a statutory apprenticeship or
  • Under 20 (this Act only guarantees you a reduced or sub-minimum rate of the national wage, as per table above)

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Short Term Rental & Airbnb Review

Revenue have issued a review in regard to short term leasing from January 2020. Revenue have now defined that;

Income for providing short term accommodation for occasional visitors such as through an online accommodation booking system is not considered rental income (Case V) and is taxable as “other income” (Case IV) if occasional income or as “trading income” (Case I) if operated as a trade such as a guesthouse.

Therefore, in summary, Airbnb rentals and similar short-term rentals are no longer considered rental income and are to be declared as ‘other or trade income’.

What does this mean for my return?

Capital allowances (expenses subject to wear and tear) are not allowable against the profits of income under Case IV. However, expenses incurred to provide such accommodation are an allowable deduction such as ; commission fees, cleaning fees, reasonable cost of light and heat. Annual costs such as insurance, tv licence and general repairs and maintenance are no longer an allowable expense against profits under Case IV.

VAT

Now that this income is considered ‘other income’, You must register for VAT if your income is likely to exceed €37,500 per year. The VAT rate for short term accommodation is at a reduced rate of 9% and applies to;

  • Letting of a room(s) in a hotel or guesthouse.
  • Short term lettings of all or part of a house, apartment or similar building.
  • Letting of a part of a caravan park or similar place.
  • Letting of a part of a camping site or similar place.
  • Provision of any other holiday accommodation.

However, the provision of student accommodation is exempt from VAT.

A VAT registered business providing taxable short-term accommodation may reclaim Value-Added Tax (VAT) incurred on their business costs under the normal VAT rules.

Should you have any queries on this issue, please contact us on 01 5397999 or request our application here

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