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July Stimulus Package and the Impact on Employment Taxes

23 July 2020

Following the announcement today on the July Stimulus Package, there are a number of key changes to the Wage Subsidy scheme, the Pandemic Unemployment Payment, the Warehousing of Tax Debt and some additional measures. 

Further details on these changes are outlined below:

Wage Subsidy Scheme

  • A new Employment Wage Support Scheme will succeed the Temporary Wage Subsidy Scheme and will run until April 2021
  • The new scheme will differ from the existing scheme in a number of key respects
  • The criteria for eligibility will be a reduction in turnover of 30% (currently 25%)
  • The current tapering rates will be replaced by a flat rate subsidy of €203 per week per employee (the current scheme pays up to €410 per week)
  • New firms operating in impacted sectors will also be eligible and temporary and seasonal workers will qualify for the subsidy
  • The start date is not specified, but is expected to be from the beginning of September.

Pandemic Unemployment Payment

  • Scheme will continue, however between now and April, there will be a gradual reduction in payment level, linked to previous incomes, ultimately bringing payments in line with the current weekly rate of Jobseekers Benefit (€203)
  • The scheme will close to new claimants from Thursday 17 September 2020.

Warehousing of Tax Debt

  • The arrangements previously announced, under which tax debts (including PAYE/PRSI and USC) will be warehoused will be placed on a statutory footing
  • The interest rate applying to agreed repayments of all tax debt (where agreement has been reached prior to 30 September 2020) will be reduced to 3%.
  • Apart from existing agreed tax debts, this would appear to cover settlements that may be agreed in respect of Revenue audits before 30 September.

Other Measures

  • Some small changes will be made to the ‘Bike to Work’ scheme which will see the maximum value of bikes that can be provided tax free to employees increase to €1,250 for ordinary bikes and €1,500 in the case of electric bikes.

Contacts

For more information, please contact:

Mark Hynes, Tax Director - [email protected]

Pat O’Brien, Employment Tax Senior Consultant - [email protected]

Laura Murray, Tax Senior Manager - [email protected]