Jobs Stimulus Plan

Jobs Stimulus Plan

July 2020 Jobs Stimulus Plan

The government, in response to COVID-19, recently announced the July Jobs Stimulus Plan which provides for several measures to boost the economy and get people back to work.
This document contains a brief overview of the measures announced as we await further information to be published by the Government, which is expected in the coming days.

 

Introduction of a new Employment Wage Subsidy Scheme (EWSS):
A new Employment Wage Subsidy Scheme (EWSS) will replace the Temporary Wage Subsidy Scheme (TWSS), which is due to end on 31 August 2020.

Some of the main points relating to the EWSS is as follows:

• The EWSS will run until 31 March 2021 and will operate as a payroll subsidy support scheme, rather than an income replacement measure and it will be open to all sectors.
• A rate of €203 or €151.50 gross per week, will be paid to eligible businesses for each qualifying employee depending on their gross weekly pay.
• No subsidy will apply where gross weekly pay exceeds €1,462 or is less than €151.50.
• Qualifying employees do not include certain connected persons. Proprietary Directors will be included from 1st September 2020 only.
• The primary criteria for qualification is that the employer must demonstrate that they are operating at no more than 70% turnover for the period 1 July to 31 December 2020 when compared to the same period last year.
• The EWSS and TWSS will run in parallel until 31 August to allow certain categories of workers previously excluded from the TWSS, for example, seasonal workers and new hires, to benefit from the EWSS.

 

Pandemic Unemployment Payment (PUP): 

The COVID-PUP will be extended to 1 April 2021, but the amounts paid will be gradually reduced over time, with the rate dependent on the pre-pandemic earnings of the claimant.

From 17 September 2020 the scheme will close to new claimants and there will be three rates of payment instead of two:

• A new top rate of €300 (down from €350) to apply to those who earned over €300 per week before the pandemic.
• Those who earned between €200 and €300 per week pre-COVID will see their payment fall from €350 to a new rate of €250.
• Claimants who earned less than €200 per week prior to the pandemic will continue to receive €203 (equivalent to the Jobseeker’s rate of benefit).

The payment rates will be further calibrated in February and April 2021. From 1 February to 1 April The payment rates will be further calibrated in February and April 2021. From 1 February to 1 April the payment rate for those earning between €200 and €300 will equate to the Jobseeker’s rate of payment (i.e. €203). Claimants with prior earnings in excess of €300 per week will have their COVID-PUP reduced to €250.

From 1 April 2021, the remaining cohort of COVID-PUP recipients will be required to apply for the standard jobseeker’s rates of payment and the COVID-PUP scheme will be closed.

 

Measures to help businesses:
The Government announced the following additional measures to help businesses and the economy to recover:

 

• VAT: A 6-month reduction in the standard rate of VAT from 23% to 21% will apply, effective from the beginning of September 2020. All other VAT rates remain the same.
• Commercial rates waiver: A waiver of commercial rates will be granted to all businesses, with limited exceptions, for the six-month period up to the end of September 2020
• Restart Grant: The Restart Grant for Enterprises will be extended to include a broader base of SMEs to expand the number of firms eligible for grant funding and provide further grant funding to those that have already received the Restart Grant. The changes include:
  • Firms with up to 250 employees are now eligible.
  • Enterprises that could not access the original grant scheme, such as B&Bs and rateable sports businesses are eligible for a grant payment of €4,000.
  • The maximum payment under the Restart Grant will now be €25,000 (increased from€10,000) and the minimum payment will be €4,000 (increased from €2,000)
• Apprenticeship Recruitment Incentive: The scheme will provide a €3,000 payment to support employers to take on new apprenticeships in 2020.
• JobsPlus Subsidy Scheme Enhancement: This scheme will provide subsidies of up to
  €7,500 over two years for employers who hire someone who is unemployed and under the age of 30.
• Credit Guarantee Scheme: Under the €2 billion Credit Guarantee Scheme, the Government will provide an 80% guarantee for a wide range of credit products from €10,000 to €1 million, up to a maximum term of 6 years
• Business Loans: The Future Growth Loan Scheme will be expanded from €200 million to
  €500 million with the European Investment Bank Group, so businesses with up to 499 employees can invest for the longer-term at competitive rates.
• Online Retail Scheme: To assist businesses to develop their online presence a further funding call of the Online Retail Scheme of €5.5 million through Enterprise Ireland will be made available together with an expansion of the Online Trading Voucher Scheme from the Local Enterprise Offices of €20 million.
• Tourism: A €10 million Restart Fund for the Tourism sector is also being introduced, along with a €10 million pilot Performance Support Scheme for the culture sector to assist planning for events in the context of Covid-19.
• Tax debt warehousing arrangements: Debt warehousing is an arrangement whereby VAT and PAYE (employer) liabilities accrued during the period of restricted trading caused by COVID-19 will be “parked” on an interest free basis for a period of 12 months.After the end of the 12-month period, the warehoused debt may be discharged or entered into a phased payment arrangement at a reduced interest rate of 3% per annum.
  The key condition for eligibility for debt warehousing is that a business continues to keep its returns up to date.The key condition for eligibility for debt warehousing is that a business continues to keep its returns up to date.
• Reduced interest rate for outstanding debts: All taxpayers that have declared but unpaid tax debts, can avail of a reduced interest rate of 3% per annum. The taxpayer must contact Revenue to agree payment of these debts or have entered into an agreement to pay these debts on or before 30 September 2020.

• Interest will apply from the later of:
  o 1 August 2020, or
  o The date the taxpayer has entered into an agreement to pay the debts to Revenue

Standard interest rates will apply up to and including 31 July 2020 or until a payment agreement is reached.

• Corporation tax loss relief: A temporary provision is being put in place to allow for the acceleration of carry-back loss relief for previously profitable companies, that incur trading losses in accounting periods affected by the COVID19 pandemic.

Companies that incur losses in a period that includes some part or all of the period from 1 March 2020 to 31 December 2020, will be able to make an interim claim to carry-back up to 50% of estimated trading losses. This can be done as early as 4 months after the beginning of that period.
This relief is subject to a number of conditions and we will be happy to review same with you in the event of you wishing to make a claim. Please contact a member of the team.

• Income tax loss relief: Temporary income tax measures are introduced for self-employed individuals whose trade or profession was profitable in 2019 but who incur losses in 2020 as a result of the COVID-19 pandemic. These measures include the following:

1. Carry-back of losses and capital allowances: Taxpayers may make a claim to have their 2020 losses (and certain unused capital allowances) carried-back and deducted from income tax paid on their profits for the tax year 2019.
2. Interim claims for carry-back of losses and capital allowances: Subject to meeting certain conditions, taxpayers may also make an interim claim to have an estimated amount of their 2020 losses (and certain capital allowances) carried-back and deducted from income tax paid on their profits for the tax year 2019.

Claims and interim claims for 1 and 2 above will be made by amending the Form 11 tax return for 2019. A €25,000 limit will apply on the total amount of losses and capital allowances that may be carried-back.

• Income averaging for farmers: An option will be given to farmers to step out of income averaging for the tax year 2020, notwithstanding that the farmer may also have stepped out of income averaging in one of the four preceding tax years.

 

Other tax measures: 

• New “Stay and Spend” tax credit: Individuals will be entitled to a tax credit equal to 20%of qualifying expenditure incurred between 1 October 2020 and 30 April 2021, subject to certain limits and conditions.
  Individual taxpayers can make a claim for the tax credit if they spend at least €25 and up to a maximum of €625 on qualifying services in restaurants, cafés, and in qualifying hotels,
  B&Bs, Caravan Parks, etc.
  Proof of the expenditure must be submitted with their claim. Taxpayers can use the receipts tracker on Revenue’s mobile application “RevApp” to keep track of their expenditure.
  The maximum tax credit available for each individual is €125 or €250 for a jointly assessed couple.

The expenditure must be incurred from a “qualifying service provider”. This entails being VAT registered and having a tax clearance certificate. In addition, the service provider must register under this scheme with Revenue.

• Help-to-buy scheme enhancements: This scheme was introduced to assist first time buyers in accumulating a deposit for a new home. The relief is granted by way of an income tax refund to the lesser of:

1. €30,000 (up from €20,000), or
2. 10% (up from 5%) of the purchase price of the new home or completion value of the property in the case of self-builds, or
3. The amount of Income Tax and DIRT paid over the four years prior to making the application

All other parameters of the scheme will remain the same. This increased relief is available from 23 July 2020 to 31 December 2020.

From 1st January 2021, the scheme reverts to its pre 23rd July 2020 position.

• Cycle to work scheme amendments: The exemption limit for employer expenditure on the provision of bicycles and associated safety equipment is increased from €1,000 to €1,250. Where the expenditure relates to the provision of an electric bike, the revised exemption limit is €1,500. Additionally, persons may avail of the exemption once in any four-year period (previously a five-year period).

 

Further Information:
We expect the Government to issue further information and details regarding the measures, schemes
and incentives announced in the July Jobs Stimulus Plan in the coming days. We would advise that you follow our PSC Website/Facebook page and the links below for further developments.
Useful links:
Revenue: https://www.revenue.ie/en/corporate/communications/documents/july-jobs-stimulus.pdf
MyGov.ie: https://www.gov.ie/en/campaigns/5654a-july-jobsstimulus/?referrer=http://www.gov.ie/julystimulus/

Contact Information: If you require further assistance or information, please contact your useful
PSC member of staff.
Disclaimer: The content of this document is for general information only and should not be relied upon as a legal or professional interpretation of any law or other guidance. While every care has been taken by the Author in the preparation of this document, PSC Accountants Limited or associated companies will not be liable to you or any third party for any loss including, but not limited to loss of profits, goodwill or any type of special indirect or consequential loss howsoever caused ( including loss or damage suffered by you as a result of an action brought by a third party) arising out of or in connection with the provision of our services, in contract, tort, by statute or otherwise, even if such loss was reasonably foreseeable or in the contemplation of us or if we had been advised of the possibility of you incurring the same unless the loss is primarily caused by bad faith, gross negligence or wilful default by us.