Aidan O'Gorman

Posted on by Aidan O'Gorman

 

Finance Bill 2022, which implements the tax changes announced on Budget Day, is currently making its way through the Oireachtas. Depending on your circumstances, measures contained in this Bill are likely to affect you and/or your business in the coming months. In addition, Revenue have announced changes to mileage and subsistence rates, an extension of the timeline for the debt warehousing scheme and an increase in the small benefit exemption.

 

See our newsletter in the following Link which summarises these recent developments:

Finance Bill 2022

 

 

Posted on by Aidan O'Gorman

Small businesses, sports clubs, community and voluntary organisations affected by flooding in Wexford on 25/26 December 2021 may be eligible for assistance under an Emergency Humanitarian Support Scheme.

The scheme, which is for businesses that have been unable to obtain flood insurance, will provide a payment for eligible businesses towards the costs of returning their premises to its pre-flood condition. This includes the replacement of flooring, fixtures and fittings and damaged stock where relevant. The scheme does not cover loss of earnings or loss of business goodwill.

 

The support is targeted at small businesses (up to 20 employees), sports clubs and community and voluntary organisations. Further information and application forms are available on www.redcross.ie. The closing date for receipt of applications is 7 February, 2022.

Posted on by Aidan O'Gorman

Recent changes to the Covid Restrictions Support Scheme (CRSS), the Employment Wage Subsidy Scheme (EWSS), and the Tax Debt Warehousing Scheme will help certain businesses affected by public health restrictions, explains AIDAN O’GORMAN.

Following the introduction of certain additional public health restrictions, the Government recently announced changes to three COVID-19 support schemes:

  • Covid Restrictions Support Scheme – Changes have been introduced to support business in the hospitality and indoor entertainment sectors who have been significantly restricted from trading due to additional public health restrictions announced in December.
  • Employment Wage Subsidy Scheme – The EWSS has opened to some new businesses and re-opened to businesses who came off the subsidy in 2021 but are now back in difficulty.
  • Tax Debt Warehousing – Warehousing of eligible tax liabilities has been extended into the first quarter of 2022.

COVID RESTRICTIONS SUPPORT SCHEME

In December 2021, the Government introduced additional restrictions (including an 8pm closing time) for businesses in the hospitality and indoor entertainment sectors. Changes to the CRSS have been introduced to support these businesses.

 

 

Under the new measures (effective from 20 December 2021), businesses who would ordinarily operate evening and night time trading hours, will be considered to be significantly restricted from operating for the purposes of the CRSS and will be eligible for support under the scheme where they meet the eligibility conditions.

The scheme will also be available to certain charities and sporting bodies.

Who is eligible?

From 20 December 2021, companies, self-employed individuals, certain charities and approved sporting bodies and precedent partners on behalf of partnerships will be eligible to make a claim for an Advance Credit for Trading Expenses (ACTE) under the CRSS scheme provided that:

  1. the trade or trading activities are carried on from a business premises located wholly within a region of the country for which restrictions announced by the Government to combat the effect of Covid-19 are in operation, and
  2. under the specific terms of the Covid restrictions in operation for the region, members of the public are either prohibited or significantly restricted from accessing the business premises in which the relevant business activity is carried on—(a restriction on accessing the business premises of a business in the hospitality and indoor entertainment sectors after 8pm will be regarded as a significant restriction on access where the business ordinarily operates later than 8pm), and
  3. as a result of the Covid restrictions, turnover from the relevant business activity in the period for which the restrictions are in operation will be no more than 40% of an amount based on the average turnover of the business in a reference period. For most businesses the reference period will be 2019 however in the case of a business established in the period 26 December 2019 to 26 July 2021, the reference period will depend on the date on which the business was established and other conditions such as having a tax clearance certificate and having complied with obligations in relations to VAT.

The eligibility criteria must be met by claimants in respect of each period for which an ACTE is claimed.

Claim period

Claimants will need to assess their eligibility for each individual claim period separately. To do so, they will need to establish the start and end date of each claim period.

The claim period will commence on the latest of the following dates:

  • 13 October 2020 (the date the CRSS was announced)
  • the date on which the Covid restrictions (which directly prohibit or significantly restricted customers from entering the business premises) came into operation.

The claim period will end on the earliest of the following dates:

  • 3 weeks after the claim period commences
  • the date on which the Regulations providing for the Covid restrictions are due to end
  • the day before the date on which the terms of the restrictions are changed, with the result that the relevant business activity is subject to an increased, or decreased, level of restrictions
  • 31 January 2022 (the day the CRSS is due to expire).

CRSS payment rate

A qualifying person is entitled to an ACTE for each full week within a claim period. For established businesses (i.e. where a person commenced a business prior to 26 December 2019), the weekly amount will be calculated by reference to turnover for the business activity for the period from 1 January to 31 December 2019 (10% of average weekly turnover for 2019 up to €20,000 and 5% thereafter).

Restart week

Businesses who have qualified for CRSS in respect of a period of restrictions will, in certain circumstances, be eligible to claim an additional week of support (ACTE) under the scheme (a “restart week”) where the business is recommenced on the lifting of Covid restrictions. The purpose of the additional week of support is to assist with the costs of recommencing after a period of restrictions.

To qualify for the restart week, the following conditions apply:

  • The relevant business must have been subject to restrictions, which required the business to either temporarily close or to significantly reduce its activities, such that the business was eligible to claim an ACTE, for a continuous period of not less than three weeks;
  • The relevant business activity must be recommenced within a reasonable period of the lifting of the restrictions. What is a reasonable period of time will depend on the particular facts and circumstances, but the claim for the restart week should only be made when the business either is about to recommence its activities, or has recommenced those activities.

The amount of ACTE available to a business in the restart week will be calculated on the same basis as the normal claim, and therefore is subject to the weekly cap of €5,000 per week.

For the purposes of determining eligibility for the restart week, it is not necessary to consider the turnover of the business in the restart week. The business will still be eligible for an ACTE in the restart week even where the turnover of the business in that week is higher than 40% (25% prior to 20 December 2021) of the average weekly turnover of the business.

Note that once a business is no longer subject to Covid restrictions which require it to prohibit or significantly restrict customers from accessing its business premises, the business will not be eligible for CRSS for the periods it chooses not to open.

EMPLOYMENT WAGE SUBSIDY SCHEME

Under measures announced in Finance Act 2021, businesses that qualified for EWSS as at 31 December 2021 will continue to be supported until 30 April 2022.

A two-rate structure of €151.50 and €203 will apply from 1-28 February 2022. A flat rate subsidy of €100 will apply for March and April. The reduced rate of Employers’ PRSI will no longer apply for these two months.

Returning to EWSS

Businesses who deregistered from the EWSS scheme in 2021 may be able to return to the scheme if they are impacted by the additional public health restrictions announced on 17 December 2021. Depending on when the business was established, the re-entry criteria are:

  • Businesses established on or before 30 April 2019 — To re-qualify for EWSS, the business must anticipate that their combined turnover for December 2021 and January 2022 will be down by at least 30% compared with their combined turnover for December 2019 and January 2020.
  • Businesses established between 1 May 2019 and 31 December 2021— To re-qualify for EWSS the business must anticipate that their average monthly turnover for December 2021 and January 2022 will be down by at least 30% compared with the average monthly turnover across the period August 2021 to November 2021 (or on a pro-rata basis if established during this four month period).

The business must also have a valid tax clearance certificate.

Where the business meets the criteria for re-entry for EWSS, it will receive support on a prospective basis for January 2022 onwards, and can remain in the scheme until the expiry date (30 April 2022).

Businesses that commence operations from 1 January 2022 onwards are not eligible for the EWSS.

TAX DEBT WAREHOUSING

Tax Debt Warehousing was introduced in 2020 to provide liquidity support for businesses suffering downturn due to the COVID-19 pandemic. The period where tax liabilities can be warehoused was subsequently extended to the end 2021 for all eligible taxpayers, with an interest free period during 2022, and 3% interest applying thereafter until the tax debt is repaid. Under changes announced in December 2021, the period where liabilities arising can be “warehoused” has been extended to the end of Q1 2022 for taxpayers eligible for COVID-19 support schemes.

Sheil Kinnear clients affected by changes to the Government’s COVID-19 support schemes can obtain further information and advice by contacting a member of our team.

 

Posted on by Aidan O'Gorman

Two key assumptions underpin Budget 2021, namely that there will be no bilateral trade deal between the EU and the UK and that Covid-19 will continue to be with us next year. Out of the total package of almost €18 billion announced by Minister for Finance Paschal Donohoe and Minister for Public Expenditure and Reform, Michael McGrath, more than €17 billion relates to expenditure, and just €270 million to taxation measures. Summarised below are the highlights.

INCOME TAX, PRSI and USC

  • There are no broad changes to income tax credits or bands.
  • The ceiling of the second USC rate band will increase from €20,484 to €20,687.
  • The weekly income threshold for the higher rate of employer’s PRSI will increase from €394 to €398 to ensure that there is no incentive to reduce working hours for a full-time minimum wage worker.
  • For the self-employed, the Earned Income Credit will increase by €150 to €1,650.
  • The Dependent Relative Tax Credit will increase from €70 to €245.

MEASURES TO SUPPORT BUSINESSES AND THE SELF-EMPLOYED

  • Extension of the tax warehousing scheme to include repayments of Temporary Wage Subsidy Scheme funds owed by employers and preliminary tax obligations for the adversely affected self-employed. Debt warehousing provisions are being extended to include the 2019 balance and 2020 preliminary tax to allow such taxpayers to defer payment for a period of a year with no interest applying; 3 per cent will apply thereafter and will attract no surcharge.
  • VAT rate reduction for the hospitality and tourism sector from 13.5% to 9% effective from 1st of November 2020. This reduced rate will be in place until December 2021.
  • Commercial rates waiver for the final quarter of this year.
  • Extension of the Employment Wage Subsidy Scheme through 2021, should it be required.
  • A new Covid Restrictions Support Scheme (CRSS) will offer a targeted, timely and temporary sector-specific support to businesses forced to close or trade at significantly reduced levels as a result of restrictions imposed on them in response to Covid-19. The scheme, which will be effective from Budget Day (13 October 2020) until 31 March 2021, will generally operate when Level 3 or higher is in place and will cease when restrictions are lifted. Payments will be calculated on the basis of 10 per cent of the first €1 million in turnover and 5 per cent thereafter, based on average VAT exclusive turnover for 2019. It will be subject to a maximum weekly payment of €5,000. The scheme will operate on a self-assessment basis and qualification will require a business to demonstrate that their turnover has been severely impacted, i.e. reduced to 20% or less of the corresponding period of 2019.
  • Knowledge Development Box relief will be extended for a further 2 years until end December 2022.
  • The accelerated capital allowances scheme for energy efficient equipment is being extended for a further three years. In addition, the energy efficiency criteria for the scheme will be re-assessed to ensure the categories of equipment availing of the scheme remain appropriate and reflect the most up-to-date efficiency standards.
  • The Capital Gains Tax Entrepreneur Relief ordinary share holding requirement is being amended so that an individual who has owned at least 5 percent of the shares for a continuous period of any three years will now qualify for this relief. Previously, a person had to own at least 5 percent for a continuous period of 3 years in the 5 years immediately prior to the disposal.

REMOTE WORKING

An Inter-Departmental Group has been set up to develop a strategy for remote working and remote service delivery. Measures already in place to support working from home include:

  • In cases where the employer makes payments towards the expenses of working from home, up to €3.20 per day may be paid to employees without a Benefit-In-Kind arising.
  • Where the employer does not make a contribution, the worker may claim a tax deduction for utility expenses such as heat and light – and, new for 2020, the Revenue Commissioners have now confirmed that this may include the cost of broadband. Details will be set out in the Revenue guidance.
  • Claims may also be made for any other vouched expenses incurred “wholly, exclusively and necessarily” in the performance of the duties of their employment.

MEASURES TO SUPPORT FARMERS

  • Increase in the Farmers Flat Rate Addition from 5.4% to 5.6% from 1 January 2021.
  • Extension of Farm Consolidation (Stamp Duty) relief to 31 December 2022.
  • Extension of Consanguinity (Stamp Duty) Relief in its present format until 31 December 2023.

CAPITAL EXPENDITURE

€500 million was provided as part of the July Stimulus Plan to accelerate capital works and to generate jobs and economic activity. Together with an additional €600 million for core capital investment in 2021, the State will deliver over €10 billion in Exchequer resources for critical projects including major road projects and investment in Dublin Port and Rosslare Europort.

Some €340 million of voted expenditure will be spent on Brexit supports in 2021. This includes an additional allocation for compliance expenditure in 2021 to finalise work at ports and airports and provides for around an additional 500 staff bringing the total provision for approximately 1,500 staff for operationalising checks ahead of 1 January 2021.

RECOVERY FUND

The Budget also provides for a flexible €3.4 billion Recovery Fund  to stimulate increased domestic demand and employment. This will focus on three main areas — infrastructure development, re-skilling and retraining, and supporting investment and jobs.

HOUSING

The additional Help to Buy scheme measures announced in the July Stimulus Plan are being extended to the end of 2021.

MOTOR TAX

A third Motor Tax table is being introduced for cars registered from the 1 January 2021. Currently, nearly half a million cars are in the pre-2008 engine sized based regime and approximately 1.6 million cars in the post 2008 CO2-based regime. Rates will remain unchanged for all cars in the engine sized regime and all but the most pollutant cars in the post-2008 regime.

CARBON TAX

Carbon tax will be increased by €7.50 from €26 to €33.50 per tonne/CO2. This increase will be applied to auto fuels from midnight on Budget Day and all other fuels from 1 May 2021. This will result in an increase of approximately 2.5c per litre of diesel and 2c per litre of petrol.

OLD RELIABLES

The price of a pack of 20 cigarettes is going up by 50c with pro-rata increase on other tobacco products.

OTHER MEASURES

The Budget reaffirms the Government’s commitment to the 12.5% corporation tax rate and contains a number of measures in support of the green agenda including support for retrofitting housing, funding for peatlands restoration and investment in the transport system. Other measures include a financial resolution that will see intangible assets acquired from 14 October 2020 fall fully within the scope of balancing charge rules while a technical amendment to the anti-tax avoidance compliant Exit Tax rules will clarify the operation of interest on instalment payments.

While it is disappointing that there was no reduction in Ireland’s Capital Gains Tax rate which remains one of the highest in Europe, overall Budget 2021 contains welcome support for businesses and the self-employed as they face into a difficult year ahead. As always, measures announced in the Budget may change as the Finance Bill makes its way through the Oireachtas. In the meantime, if you would like to discuss how Budget 2021 affects your business, please contact a member of our team.