July Jobs Stimulus

July Jobs Stimulus 2020

The July Jobs Stimulus aims to help Irish businesses back on their feet and get as many people as possible back to work quickly. It is the next stage in the Government’s economic response to the COVID-19 crisis, building on the extensive business and employment supports deployed earlier this year.

The €7 billion expenditure package will be used to fund a wide variety of measures set out in the following summary

The July Jobs Stimulus 2020 is supported by the Financial Provisions (Covid-19) (No. 2) Act 2020 , and details are also set out in the Explanatory Memorandum.  

Many of the measures in the Stimulus reflect proposals in Chartered Accountants Ireland’s position paper “The Next Financial Year: Making Irish Business More Competitive”,  which was distributed to all Oireachtas members and relevant Government departments in early July.

Key measures introduced in the Financial Provisions (Covid-19) (No. 2) Act 2020 are as follows:

Employment Wage Support Scheme to succeed the TWSS (Section 2)

A new Employment Wage Support Scheme (EWSS) runs in parallel to the Temporary Wage Subsidy Scheme (TWSS) from 31 July. Key features of the EWSS are as follows

  • The EWSS will succeed the TWSS from 1 September and continue to the end of March 2021.
  • Employers must reassess their eligibility for wage support. Employers who can demonstrate to the satisfaction of Revenue that turnover or customer orders are estimated to have fallen by 30 per cent for the period July to December 2020, compared to the same period last year, will be eligible for the EWSS.
  • Employers will receive a flat-rate subsidy of up to €203 or €151.50 per employee, per week, depending on the employee’s gross weekly pay. A subsidy will not be available for employee’s whose gross weekly earnings are less than €151.50 or greater than €1,462.
  • The EWSS is available for new and seasonal employees, in addition to existing employees.
  • The EWSS is open to newly commenced businesses. The eligibility criteria for new businesses will be assessed against projected turnover or customer orders had there been no COVID-19 disruption. The EWSS is also available to employer’s registered under Section 58C of the Child Care Act 1991.
  • The EWSS is expected to support 350,000 jobs at an estimated cost of €1.9 billion. 

Chartered Accountants Ireland, in partnership with Sage, hosted a webinar with Revenue on Wednesday 26 August, which covered the Employment Wage Subsidy Scheme. The webinar is available now for viewing. 

Special warehousing and interest provisions (Section 3, 4 and 5)

Debt warehousing legislation is set out in the Bill to support the scheme announced in May – see the dedicated Warehouse webpage

Reduced interest on overdue tax (Section 6)

A new Section 1080A TCA 1997 provides for a reduced interest rate of approximately 3 per cent per annum to apply from 1 August 2020 to taxes declared under agreements reached with Revenue by 30 September 2020. 

This measure does not apply where legal proceedings to recover the tax debt has been initiated by Revenue or where the sheriff or country register has initiated proceedings to recover the tax debt.   

Stay and Spend tax credit (Section 7)

Key features of the Stay and Spend tax credit are as follows:

  • It is an income tax credit, equal to the lesser of 20 per cent of the expenditure on accommodation, food, and non-alcoholic drink and €125 or €250 in the case of a jointly assessed couple.
  • The maximum tax credit is €125/250 cumulatively over 2020 and 2021.
  • The period during which qualifying expenditure may be incurred runs from 1 October 2020 to 30 April 2021, although the Minister for Finance may extend the qualifying period up to 31 December 2021.
  • The tax credit may be set against a claimant’s USC liability if he/she cannot fully absorb the tax credit against income tax.
  • The service provider must register with Revenue by electronic means and the claimant must claim the credit by electronic means also.  

Enhanced tax relief under the Help to Buy Scheme (Section 8)

Tax relief under the Help to Buy Scheme is enhanced to the lesser of

  • €30,000 (up from €20,000) or
  • 10 per cent (up from 5 per cent) of the purchase price of the new home or of the completion value of a self-build or
  • income tax and DIRT paid by the claimant over four years.

This enhanced relief is only available from 23 July 2020 to 31 December 2020. From 1 January 2021, the Help to Buy Scheme reverts to the pre 23 July 2020 position. 

Enhanced Cycle To Work Scheme (Section 9)

The limit on allowable expenditure under the Cycle to Work Scheme as per Section 118 (5G) TCA 1997 increases from €1,000 to €1,500 for ‘ebikes’ and related safety equipment and to €1,250 for other bicycles and related safety equipment.

The scheme currently allows the purchase of a new bicycle once in any 5 years and this will be amended to once in any 4 years. 

Loss relief for self-employed (Section 10)

Self-employed individuals carrying on a trade or profession who were profitable in 2019 but, because of the COVID-19 pandemic, incur losses in 2020 can claim to have losses of up to €25,000 carried back for offset against their 2019 profits. 

The relief can also be claimed on an interim basis during 2020.

 

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