July Jobs Stimulus – Summary of Taxation measures

Revenue have issued a guide to the taxation measures announced by the Government in the July Jobs Stimulus package.  This guide covers:

  • “Debt Warehousing” with regard to VAT and Employer liabilities (PAYE etc) accrued during the restricted trading period caused by Covid-19 are parked on an interest-free basis for 12 months subject to certain conditions. After the end of the 12 month period, the warehoused debt may be discharged in full or the taxpayer must enter into a phased payment arrangement at a reduced rate of interest of 3% per annum.   The key condition for eligibility is that Tax returns are kept up to date.  Businesses availing of debt warehousing still qualify for a tax clearance certificate if they otherwise meet the relevant conditions.
  • From 1 August 2020, a 3% reduced interest rate for outstanding “pre-Covid-19” debts relating to existing Phased Payment Agreements and new agreements entered into on/before 30th September 2020 (subject to agreement with  Revenue).
  • Replacement of Temporary Wage Subsidy Scheme with a new Employment Wage Subsidy Scheme(EWSS) to run from 1 July 2020 to 31 March 2021. Eligibility based on an expected 30% reduction in Turnover or customer orders in the period from July to December 2020.  Available to new businesses based on a projected forward test.  Registered childcare providers can avail of the scheme without having to meet the 30% reduction test.  EWSS provides a flat rate of €203 for qualifying employees paid between €203 to €1462 gross per week and €151.50 for employes paid between €151.50 to €202.99 gross per week. No subsidy for employees paid less than €151.50 per week or above €1462 per week gross.  No subsidy for proprietary directors.
  • Help to Buy (HTB) Scheme.  An increase in the income tax relief for the HTB scheme available from 23 July to 31 December 2020 – Lesser of (i) €30,000 or (ii) 10% of the purchase price or completion value for self-build or (iii) amount of Income Tax/DIRT paid over previous 4 years.
  • A Stay and Spend tax credit equal to 20% of certain qualifying expenditure (accommodation, food, and non-alcoholic drink) incurred between 1 October 2020 to 30 April 2021, subject to certain limits and conditions. Minimum spend of €25 on a qualifying service with a qualifying provider (VAT registered/holds a current tax clearance certificate and registers with Revenue).  The taxpayer must submit proof of purchase.
  • Corporation Tax – Accelerated loss relief – Companies that incur losses in a specified accounting period (includes some part of 1 March 2020 to 31 December 2020) will be able to make an interim claim to carry-back 50% of estimated trading loss against the previous year subject to certain conditions.
  • Income Tax Losses/Capital Allowances – 2020 losses incurred due to Covid-19 may be claimed against 2019 subject to certain conditions.  An interim claim also available.  €25,000 limit will apply to the total amount of losses/capital allowances that may be carried back.
  • Income averaging for farmers – An option to step out of income averaging for 2020.
  • Cycle to Work Scheme – increased from €1,000 to €1,250 and for electric bikes, the limit is €1,500. Available once every 4 years (previously 5 years).
  • VAT – 6-month rate reduction the standard rate from 23% to 21% from 1 September 2020.

For more detail on the above, click on this link July Jobs Stimulus 2020 – Summary of Taxation Measures