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€500 Small Benefit Exemption

Employers can issue one voucher/gift card per year to an employee up to the value of €500, tax free, subject to certain conditions. This benefit cannot be redeemed for cash.

During Covid-19, the limit of one voucher has been waived, therefore if an employer wishes to reward staff working through the pandemic they can do so, tax free.

The maximum value still remains at €500 but can be issued in separate vouchers.

Please note this article is for information purposes and does not constitute advice. Details correct at time of publishing.

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July Stimulus Plan

The Government has announced a range of tax, loan and expenditure measures in the July Stimulus Plan to support businesses that are affected by Covid-19.

  1. Employment Wage Subsidy Scheme (EWSS)

This will support employers by providing a subsidy per employee. It will replace the Temporary Wage Subsidy Scheme from 01st September. The employer must be operating at less than 70% turnover between July -December compared to last year to qualify. It is due to be in place until March 2021.

  1. Temporary VAT reduction

VAT rate will be reduced from 23% to 21% from 01st September – 28th February 2021

  1. ‘Stay and Spend’ incentive

Aiming to incentivise taxpayers to spend on accommodation and/or food in Ireland. The Taxpayer must spend a minimum of €25 and submit the receipt to Revenue through a new mobile app, spend is capped at €625. Revenue will apply a credit of 20% of the amount paid, subject to a maximum amount of €125. This is due to run from 01st October – 30th April 2021

  1. Corporation tax loss relief for companies

Corporation Tax due to be paid over the next 18 months will be accelerated, providing liquidity supports for businesses. The maximum amount of the expected current year loss which will qualify will be 50%

  1. Income Tax Relief for self-employed

For self-employed individuals, who were profitable in 2019 but due to Covid-19 are now operating at a loss in 2020 will provide a new once-off tax relief of up €25,000 of 2020 losses and unused capital allowances to off-set against 2019 profits.

  1. Enhanced Help to Buy Scheme

Support available to first time buyers will be increased to the lesser of €30,000 (up from €20,000) or 10 per cent (up from 5 per cent) of the purchase price of the new home/self-build property. This will run until December 2020 and is effective immediately.

  1. Cycle to Work Scheme

Expense will be increased from €1,000 to €1,500 for e-bikes and €1,250 for bikes. Other amendments made to this scheme allows the purchase of a new bike every 4 years, reduced from every 5 years.

  1. Reduced interest rate

A reduced rate of 3% to be applied to repayments of tax debt for all businesses, including sole traders once agreed with Revenue

  1. VAT Warehousing

Businesses effected by Covid-19 can delay their payment of PAYE & VAT with no penalties

Please note this article is for information purposes and does not constitute advice. Details correct at time of publishing.

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Income Tax & Preliminary Tax

Should I be Income Tax Registered?

You should register for Income Tax if;

  • You are self-employed
  • In receipt of additional income outside of PAYE, exceeding €5,000
What is Preliminary Tax and do I have to pay it?

Preliminary Tax is an estimate of the income tax due for a tax year. This is paid in advance of filing your income tax return for that year. This is due by 31st October of that tax year.

Preliminary Tax due is;

  • 90% of the tax due for that year
  • 100% of the tax due for the previous tax year
  • 105% of the tax due for the tax year preceding the previous year but only applicable if currently paying by direct debit.

For example, Preliminary Tax due for the year 2020 is due to be paid by 31st October 2020. This can be submitted when filing your 2019 Income Tax Return. Underpayment or late payments of Preliminary Tax may be charged interest for each day past the deadline.

Pay and File System – how does this work?

By the 31st October each year, you must;

  • Pay your Preliminary Tax for that year i.e 2020
  • File your Tax Return for the previous year i.e 2019
  • Pay any balance of tax due for the previous year i.e 2019

The pay and file deadline is extended into November for returns filed online through Revenue Online Services (ROS). Late filing of tax returns will incur surcharges of 5% of tax due within 2 months of filing or 10% of tax due thereafter.

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Credit Guarantee Scheme for SME’s

A new Covid-19 Credit Guarantee Scheme for 2020 will be released this Autumn, with over €2 billion in credit available.

This will enable small to medium sized businesses to access overdrafts, term loans and working capital with payment free periods from six months to a year and terms of up to 7 years.

The aim is to provide low-cost loans to businesses severely affected by Covid-19 and to help the economy re-open, with the government offering a partial guarantee of 80% to the banks against losses on those qualifying loans.

Minister Leo Vradkar said;

“We want to help viable businesses to get through the difficult phase of reopening and deal with the new realities and challenges posed by COVID-19. The Credit Guarantee Scheme will provide low cost loans to businesses and will in turn help more people to get back to work, We want to give confidence to SMEs in particular, by providing the liquidity needed to get through the economic upheaval caused by the pandemic.

The July Stimulus Package will be the next step in our recovery plan as we seek to get businesses back on their feet and our people back to work.”

It will be operated through participating lenders, which are Ulster Bank, AIB and Bank of Ireland.

While you are here, Read more of our Covid-19 update blogs here

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