Temporary Wage Subsidy Scheme & Employment Wage Subsidy Scheme
A Temporary Wage Subsidy Scheme (TWSS), which came into effect on 26 March 2020 and ceased on 31 August 2020, enabled employees, whose employers were affected by the pandemic, to receive significant supports directly from their employer through the payroll system. On 23 July 2020, the Irish government announced the Employment Wage Subsidy Scheme (EWSS). This scheme was introduced to replace the TWSS. Both schemes (TWSS and EWSS) ran in parallel until the end of 31 August 2020, allowing new hires and employees not previously eligible for TWSS to qualify for EWSS where they meet the new criteria. The EWSS ended for most businesses on 30 April 2022 and for all businesses by 31 May 2022.
Filing and tax rule changes
In addition, Irish Revenue relaxed their approach to certain filing deadlines and some tax rules as a result of the pandemic, including:
Trans-border Workers Relief
If an employee is required to work from home in Ireland due to COVID-19, these days spent working at home in Ireland will not remove the individual's entitlement to claiming Trans-border Workers Relief, provided each of the other conditions are met. This concession expired with effect 31 March 2022.
Relaxation of taxable benefits-in-kind (BIK)
A number of employee-incurred expenses may be reimbursed by their employer tax free during the pandemic. Examples include reimbursement of taxi fares for travel to/from work due to health and safety concerns, employer provided home office equipment (e.g. laptops, printers, scanners), and, in certain circumstances, employer provided accommodation as a result of health or safety concerns. Revenue announced the taxi fare concession will cease to apply from 1 June 2022.
Working from home costs
In an effort to acknowledge costs being incurred by employees as a result of working from home, the Irish Revenue introduced a deduction whereby employees can claim a deduction of 30% of broadband expenses, costs for electricity and heat incurred while working remotely. The deduction can only be claimed for days working from home and are claimed via an employee's tax return.
Provision of COVID-19 testing/flu vaccinations
Irish Revenue confirmed that the provision of a COVID-19 test by an employer for an employee will not be considered a taxable BIK. Additionally, Irish Revenue has relaxed the BIK rules to allow an exemption where an employer arranges for the flu vaccination to be provided for their staff. This provision has been extended for the 2022 tax year and subsequent years. An employee can claim a tax credit via their tax return for the flu vaccine in their health expenses if they incur the cost themselves.
Small benefit exemption
Currently, Irish Revenue allows for one non-cash incentive per year (up to the value of EUR 500) to be given by an employer to an employee tax free, provided certain conditions are satisfied. The most common qualifying incentive would be the provision of gift vouchers that are not redeemable for cash. Where an employer wishes to recognise efforts of key staff working during the COVID-19 crisis, the requirement that only one incentive (subject to the overall limit of EUR 500) is issued by the employer was concessionally waived for 2020, where the additional award is related to an employee's exceptional efforts during the COVID-19 crisis. This concession has been extended for the 2022 tax year.
Irish Finance Act 2022
Following the most recent Irish Finance Act (effective from 1 January 2022):
- From 1 January 2022 there will be an increase of €1,500 to the income tax bands. As a result, the single tax band will increase to €36,800 while the married tax band (2 incomes) will increase to €73,600.
- There is an increase in the upper threshold for the 2% USC band (from EUR 20,687 to EUR 21,295). This change is due to the increase in the Irish national minimum wage from 1 January 2022.
- There is an increase in the Earned Income Tax Credit from EUR 1,650 to EUR 1,700 for 2022 and subsequent years.
- The Personal Tax Credit is being increased from EUR 1,650 to EUR 1,700 for 2022 onwards.
- The Employee Tax Credit is being increased from EUR 1,650 to EUR 1,700 for 2022 onwards.
- The weekly income threshold for the higher rate of employer PRSI will increase from EUR 398 to EUR 410, with effect from 1 January 2022.
- The current working from home regime is to be enhanced from 2022 onwards. A 30% deduction in respect of vouched heating, electricity and broadband expenses will apply to days spent working from home.
- Revenue extended the exemption from BIK in reference to employer provided electric vehicles until December 2022. For any electric vehicles provided to employees after 10 October 2018, the employee's private use of the vehicle will be fully exempt from BIK provided the Original Market Value (OMV) of the vehicle does not exceed €50,000. Electric vehicles with an OMV in excess of €50,000 will trigger a BIK charge, but only on the excess over €50,000. From 2023 a tapering effect will apply to the value of the electric vehicle.
- The Help to Buy Scheme has been extended to the end of 2022.