July 2020 Jobs Stimulus Key Tax Measures & Funding Supports - Baker Tilly
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AUDIT | TAX | ADVISORY | CORPORATE ADVISORY
July 2020 Jobs Stimulus
Key Tax Measures & Funding Supports
30 July 2020
Introduction
On 23 July the Irish Government expires at the end of August. The two
announced the €7.4 billion July Jobs schemes will run concurrently during
Stimulus, a package aimed at getting August in order to allow seasonal workers
people back to work as the Irish economy and new hires (not eligible for TWSS) to
continues to reopen following the shutdown avail of the EWSS during the month. The
in response to the COVID-19 pandemic. EWSS will run until 31 March 2021, subject
The Government has stated that the to extension by the Minister for Finance.
package will “build economic confidence, Under the EWSS, employers whose
within public health constraints, and deliver turnover has fallen by 30% will be able to
immediate effective supports to get people avail of a flat-rate subsidy of up to €203 per
back to work”. week per employee. In order to meet the
The value of the tax measures included in 30% test, companies will be required to
the package is estimated to be €1 billion demonstrate that they reasonably expect a
while the employer supports outlined below 30% reduction in turnover or customer
are expected to amount to approximately orders during the period July 2020 to
€1.9 billion. We outline below some of the December 2020 compared to the same
key measures introduced and a summary period in 2019.
of the key funding supports available to The EWSS will be a critical support for
businesses. employers in their efforts to retain
employees and potentially hire additional
staff. It is therefore no surprise that just
Employer Supports over a quarter of the funds allocated to the
package have been allocated to wage
The Employment Wage Subsidy Scheme subsidies.
(“EWSS”) will succeed the Temporary
Wage Subsidy Scheme (“TWSS”) whichAUDIT | TAX | ADVISORY | CORPORATE ADVISORY
Warehousing of PAYE Accelerated Loss Relief for
(Employer) and VAT debts Companies
A temporary acceleration of relief for losses
The package enacts the legislation for the carried back has been provided for
warehousing of deferred tax debts companies which were previously
associated with the COVID-19 crisis which profitable but have incurred trading losses
was announced in May. VAT and in accounting periods affected by COVID-
Employer PAYE debts deferred while a 19. Companies that incur losses in an
business was unable to trade or was accounting period that includes some part
subject to restricted trading due to COVID- of the period from 1 March 2020 to 31
19 related health restrictions, as well as December 2020 will be allowed to make an
debts accrued up to the end of the first bi- interim claim to carry back up to 50% of its
monthly VAT period after the business estimated trading losses for the relevant
returns to “normal” activities, will be accounting period to the previous
ringfenced by Revenue. accounting period.
Following a resumption of “normal” trading, The company must have filed a tax return
the outstanding VAT and Employer PAYE for the previous accounting period, be
debts will be warehoused for 12 months generally tax compliant and make a
during which there will be no collection of declaration that it has incurred to
this debt by Revenue and no interest will be reasonably expects to incur a loss during
charged. Current liabilities will be required the 2020 accounting period.
to be paid as they arise during this period.
Reduced VAT Rate
At the end of the “warehoused” 12 months
period, a reduced interest rate of 3% will The standard rate of VAT will be reduced
apply to the repayment of any warehoused from 23% to 21% for a six-month period,
tax debt until it is fully paid. effective from 1 September 2020.
Somewhat surprisingly, no reduction in the
Current refunds and repayments of tax VAT rate for the tourism and hospitality
debt that arise during the 12 months period sector was introduced, with the rate
will be paid even where a business owes remaining at 13.5%.
“warehoused” liabilities.AUDIT | TAX | ADVISORY | CORPORATE ADVISORY
Tax Measures for Individuals
Help to Buy (“HTB”) Scheme
Accelerated Loss Relief
The income tax relief available under the
Self-employed individuals whose
HTB Scheme is increased for the period
trade/profession was profitable in 2019
23 July 2020 to 31 December 2020 to the
but in a loss position in 2020 as a result
lesser of:
of COVID-19 will, on a once off basis, be
• €30,000 (up from €20,000), or able to carry back their losses (and
• 10% (up from 5%) of the certain unused capital allowances) for
purchase price of a new home or 2020 in order boost their cash flow. The
of the completion value of the amount of losses that can be carried
property in the case of self-builds, back is capped at €25,000 and the
or individual can claim the relief by
• The amount of income tax and amending their 2019 income tax return.
DIRT paid over the four years Subject to meeting certain conditions,
prior to making the application. taxpayers may also make an interim
claim to have an estimated amount of
their 2020 losses (and certain capital
allowances) carried back to 2019.
Stay and Spend Tax Credit
A new tax credit has been introduced for
certain expenditure on accommodation,
food and non-alcoholic drinks during the Cycle to Work Scheme
period 1 October 2020 to 30 April 2021,
subject to certain conditions being met. The maximum employer expenditure on
Individuals will be entitled to a tax credit the provision of bikes and safety
equal to 20% of their qualifying equipment to employees is increased
expenditure during the period. The from €1,000 to €1,250 (or €1,500 for
maximum tax credit per individual will be electric bikes). Claims can now be made
€125. every four rather than five years.AUDIT | TAX | ADVISORY | CORPORATE ADVISORY
Summary of other Funding Supports
• Commercial rates have been waived for • The Future Growth Loan Scheme is being
the 6 month period to the end of expanded from €200 million to €500
September 2020.
million with the European Investment
Bank Group, so businesses with up to 499
• The Pandemic Unemployment Payment
employees can invest for the longer-term
(“PUP”) is being extended by 7 months
at competitive rates.
until 1 April 2021.
• €10 million will be provided to support
businesses engaging in green research,
• The Restart Grant is being expanded to a
development and innovation, capital
broader base of SMEs and expanded by
investment, and capacity building,
€300 million. The payment level is being
through the first phase of a new Green
increased by €25,000 and further
Enterprise Fund.
payments may be available to companies
which have already received them.
• Increase of €10 million in funding for the
Seed and Venture Capital sector through
• A €10 million Restart Fund for the
Enterprise Ireland as a top-up to existing
Tourism sector is also being introduced,
funds and leveraging a combined
along with a €10 million pilot Performance
additional pool of investment of €55
Support Scheme for the culture sector.
million.
• The €2 billion COVID-19 Credit • Further funding of the Online Retail
Guarantee Scheme will see Government Scheme of €5.5 million through
provide an 80% guarantee for a wide Enterprise Ireland and an expansion of
range of credit products from €10,000 to the Online Trading Voucher Scheme from
€1 million up to a maximum term of 6 the Local Enterprise Offices of €20
years. million.
• A package of liquidity and enterprise • Expansion of the Enterprise Ireland
investment measures worth €55 million Sustaining Enterprise Fund scheme to
will be put in place to support small and include direct grant support to viable
micro companies through additional businesses, in addition to equity and
resources for Microfinance Ireland and repayable advances.
the Local Enterprise Offices.AUDIT | TAX | ADVISORY | CORPORATE ADVISORY
Top Tips Contact
Seek Advice Baker Tilly are here to help – feel free to
contact us for assistance and guidance on
Seek advice from your tax, and other
any of the above.
financial advisors, as to what reliefs,
schemes and supports are available to
assist companies as the economy reopens
and how you can avail of same.
Engage
Engage with the Revenue Commissioners,
your banks/financial institutions and
Government agencies to avail of the
measures that may be available to provide
a cash flow boost to your company and you
personally during this period of uncertainty.
Communicate
Communicate with your employees and
other stakeholders and be up front in
relation to your company’s position, and the
supports it is availing of as it reboots over
the coming weeks and months.
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