The key employment tax, personal and private business tax measures introduced in Finance Bill 2022 are as follows:
The Small Benefits Exemption scheme has increased to €1,000 per year for up to two vouchers/gifts.
The Special Assignee Relief Programme (SARP) has been extended to the end of 2025 with the minimum income requirement increasing from €75,000 to €100,000.
The Cycle to Work Scheme has been extended to include cargo bicycles.
Foreign Earnings Deduction relief has been extended to 2025.
Measures that could ultimately impose additional monthly reporting responsibilities on employers in reference to non-taxable remuneration items such as tax-free expense reimbursements.
Increases to personal tax thresholds and credits.
The introduction of the Temporary Business Energy Support Scheme (TBESS).
The correction of a technical anomaly under the Employment Investment Incentive (EII) scheme and some changes related to the issue of tax certs and clawbacks.
Some changes to capital taxes but unfortunately, none related to the transfer of business assets.
No announcement yet on changes to the Key Employee Engagement Programme (KEEP) that were flagged in the Minister’s speech on Budget Day.
The Small Benefit Exemption Scheme
The annual limit for the Small Benefits Exemption scheme has increased from €500 to €1,000. The scheme now allows employers to provide up to two vouchers to an employee each year up to the relevant cap. The increase is effective from 2022 and is a welcome measure for employers who are currently trying to support employees with the rising cost of living in the short-term.
Special Assignee Relief Programme
The Special Assignee Relief Programme (SARP) has been extended through to the end of 2025. The minimum income requirement has been raised from €75,000 to €100,000 effective for individuals arriving in Ireland after 1 January 2023. A specific reference to the requirement to have a PPSN is also noted in the draft legislation.
Other employee benefits
The Cycle to Work Scheme has been extended to apply to cargo bicycles and e-cargo bicycles (pedelec configuration). Where the expense is in reference to a cargo bicycle, the amount applicable for relief will be up to €3,000.
There has also been a welcome extension of the Foreign Earnings Deduction (FED) relief to 31 December 2025.
The Bill includes measures to impose additional reporting responsibilities on employers. Per the drafted measures, employers would be responsible for the monthly electronic reporting of certain ‘reportable benefits’ that are not subject to PAYE withholdings. The reportable benefits are the remote working daily allowance, benefits provided under the Small Benefit Exemption scheme, and travel and subsistence payments where no tax is deducted. The proposed measures will be subject to a commencement order to allow for stakeholder engagement.
These proposed measures are significant and reinforce Revenue’s focus on obtaining real-time data from employers in reference to employee benefits.
Personal tax thresholds, exemptions and credits
The Bill includes the increase of €3,200 to the Standard Rate Income Tax Cut Off Point along with an increase to the personal, PAYE and earned income credit for the self-employed of €75 each.
There was also a small increase in the 2% threshold for USC from €21,295 to €22,920 to reflect the increase to the national minimum wage.
Temporary Business Energy Support Scheme
The Bill introduces the Temporary Business Energy Support Scheme (TBESS), which will apply to qualifying businesses that satisfy a number of conditions, including a requirement to demonstrate increases of 50% or more in their electricity or gas bills when compared with the electricity or gas bill received in the same month in the previous year. Provision is also made for businesses that did not have an electricity or natural gas connection in the relevant month in the previous year.
Where the business meets this threshold, they may be eligible for a refund of up to 40% on the increase in electricity or gas prices subject to a monthly cap of €10,000 per trade or profession. An increased cap of €30,000 can apply where a qualifying business has more than one MPRN/GRPN at different locations. An overall maximum payment limit also applies.
Employment Investment Incentive scheme
Last year’s Finance Act included a very welcome amendment to open up the EII to include “qualifying investment funds”, which captures limited partnership structures established either under the Limited Partnership Act 1907 or the Investment Limited Partnership Acts 1994.
Finance Bill 2022 now proposes correcting a technical anomaly that would disqualify investors from claiming tax relief on account of being deemed “connected” with the EII company, solely as a consequence of previous investments that another “partner” (or their relatives) had made. The anomaly should now be addressed because a “partner” for the purpose of the relevant section will now only encompass individuals who are separately in partnership with each other in a true commercial/trading sense.
Capital Acquisitions Tax
The Bill widened the definition of a child in response to recent amendments to the Succession Act 1965 made by the Birth Information and Tracing Act 2022. It is now possible for impacted individuals to make an election as to the relationship to apply for CAT purposes where a person takes a taxable benefit from his or her birth parents or from his or her social parents.
Furthemore, banks now also have a statutory obligation to provide information in relation to a deceased person’s accounts to the person applying for probate in relation to the deceased’s estate or to an agent acting on their behalf.
We are here to help you
Finance Bill 2022 comes at a time when individuals, families and businesses are struggling with rising inflation and cost-of-living increases. Although there were some small wins in the employee benefits space, the Bill proposes increased reporting obligations for employers to manage. PwC is here to help you understand what the Bill means for you and your business.