The majority of legislative measures in Finance Bill 2020 in relation to employment and individual taxes mirror the announcements on Budget day. It includes provisions relating to USC band changes, increases to certain credits such as the Earned Income Credit for the self-employed and the Dependent Carer Credit and extension of the Help-to-buy Scheme. Other measures not previously announced include new and amended provisions relating to share schemes. In addition to Finance Bill changes, Tax and Duty Manual Part 05-02-13 in relation to e-working and tax has also been updated by Revenue.
Finance Bill 2020 confirms that the Pandemic Unemployment Payment and COVID-19 Pandemic Unemployment Payment is a taxable emolument for income tax purposes.
While not specifically in the Finance Bill, the Employment Wage Subsidy Scheme was recently amended to bring it in line with amendments to the Pandemic Unemployment Payment, bringing the top rate of payment back up to €350 per week for employees who earn over €400 per week. The revised scheme will run to the end of January 2021.
Finance Bill 2020 also provides for the inclusion of certain proprietary directors within the Employment Wage Subsidy Scheme from 1 September 2020.
The provisions have also confirmed the extension of the tax warehousing scheme to include repayments of Temporary Wage Subsidy Scheme (TWSS) funds owed by employers. The scheme will operate on a similar basis to the existing warehousing scheme for employer PAYE and VAT liabilities and will only apply to employers who as a consequence of COVID-19 are unable to pay their relevant tax and who have filed all relevant PAYE and TWSS returns. All SMEs whose tax affairs are dealt with in Revenue's Business Division or Personal Division will qualify automatically and others will need to contact Revenue. The bill also provides for the warehousing of "COVID-19 income tax" which relates to the 2019 income tax liability and 2020 preliminary tax liability for the self-employed.
Finance Bill 2020 includes the changes to USC bands as announced in Budget 2021 to take into account recent increases in minimum wage. The Dependent Carer Credit is increased to €245 and the Earned Income Credit for the self-employed is increased to €1,650.
The Help to Buy scheme in its current enhanced format has also been extended to the end of 2021. Under the provisions, the current expiry date on the availability of the enhanced relief of 5% of purchase price or €20,000 to 10% of purchase price or €30,000 has been extended from 31 December 2020 to 31 December 2021.
Finance Bill 2020 provides for mandatory reporting of information by employers in relation to awards of shares to directors and employees, except where the employer is already obliged to report the information. It also extends the scope of reporting to include awards given in the form of cash or where a discount on shares is provided and mandatory electronic reporting. The Bill also continues the moves in recent years towards e-filing of awards under share plans by providing for mandatory e-filing of restricted share, forfeitable share and convertible securities plans in a format to be prescribed by Revenue.
While employees will broadly welcome the support for businesses announced in Budget 2021, and by extension for their jobs, the vast majority would have liked further support when it comes to working from home. Unfortunately, Finance Bill 2020 does not contain additional reliefs to support the significant number of people who are now working remotely, however, Revenue have updated the Tax and Duty Manual Part 05-02-13 in relation to e-working and tax. The key changes and clarifications include:
We await the report from the interdepartmental group tasked with developing the country's remote-working strategy. Further measures to support working from home arrangements, which are likely to continue for many months to come, would be welcome.
There is no doubt that employers will continue to find the weeks and months ahead challenging. We are ready to help you as you face the future. Contact us today.