Tax Relief

Distant staff are feeling the disaster with an insufficient tax break system

L.The release of the government’s latest rural development initiative in a month was widely welcomed, especially by those for whom the Covid-19 emergency has eliminated long hours in morning and evening traffic.

The plan provides 400 remote work hubs nationwide so that more people can live and work in rural communities.

The aim is to move 20% of public sector workers to remote work this year, with further annual increases over the next five years.

Legislation gives employees the right to request remote work.

As part of the 2022 budget, the coalition has also committed to reviewing tax regimes for remote working for both employers and employees.

This measure was not welcomed in all areas.

Marian Ryan, Excise Duty Manager at Taxback.com, says current work on home tax breaks and discounts should have been reviewed in this year’s budget.

“As it stands, you can claim 30% of the broadband cost of working days at home, along with other mandatory expenses, if those are ‘wholly, exclusively and necessarily’ part of your work,” said Ms. Ryan.

“In addition, you can only claim these costs if your employer has not yet paid for them.

These allowances will remain in place for the duration of the Covid-19 pandemic.

“According to the announcement, tax incentives for 2022 will likely not be announced until October, after all employees previously resident in the city have to decide whether to live in Dublin again.”

Many employees have incurred additional costs from working remotely.

The existing tax incentives are hardly worth writing home about.

If you go to the hassle of collecting and claiming your receipts, you’ll be deducting anywhere from $ 20 to $ 60 per year depending on salary and other factors.

“We know that some workers are under financial pressure from the added cost of working from home,” says Ms. Ryan.

“In a survey we conducted in mid-2020, 86% of people working from home believed that remote working would remain to some extent a dominant feature of their work arrangements through the end of 2021, while 89% said their household expenses would have done and will increase as a result.

“Anything the revenue or the government can do to give back to these workers must be welcomed,” said Ms. Ryan.

Flat-rate expenses

A previous survey by the company found that only 5% of employers in the Irish remote workforce pay the tax-free cost of € 3.20 per day.

This allowance covers any additional costs associated with working from home. It’s tax-free, which means employers don’t have to deduct PAYE, PRSI, or USC from that amount. However, there is no legal obligation to pay for them.

The solution, says Ms. Ryan, is to introduce a new flat-rate spending category for remote workers.

Flat-rate expenses – or FREs – are an allowance for the cost of performing your employment duties. These costs are directly related to the nature of this employment.

Typically, when you encounter legitimate labor-related costs, keep the receipt and entitlement at the correct time. FREs were introduced to streamline this process and provide untouched flat-rate allowances to a long list of employees who encounter these costs on a daily basis.

Agreed deduction

The amount of the deduction is agreed between the revenue and representatives of groups or classes of workers, usually union representatives.

All employees in the relevant class or group can then claim the agreed deduction in their own tax credits.

For example, electricians can charge € 153 per year, head waiters € 127 and fishermen € 318. The list is long and quirky.

Beauticians who have to deliver and wash their own uniforms receive € 160 per year, Church of Ireland clergymen € 127 and bookbinders (hand) € 109, bookbinders (other) only € 97.

It’s pretty antiquated too. Female cardiac technicians get € 212 while men with the same job get only € 107.

“This type of relief is already built into our tax system,” says Ms. Ryan, “so it could be relatively easy to implement.

In essence, this would mean that people would have significantly more money in their pockets.

“Our estimates assume that the difference could be between 100 and 200 euros or more.

“The introduction of a lump sum equivalent to this payment of € 3.20 / day would bring a welcome capital injection to the finances of an employee and relieve the employer.”

However, it is currently unlikely that these certificates will be used, even if they are increased significantly.

Why? Because up to two-thirds of Irish taxpayers do not get the tax breaks and refunds they already owe.

Expectations

This was one of the key findings of another Taxback.com survey.

The research, which surveyed 3,200 taxpayers, found that the main reason for not filing a claim was because people did not believe they were entitled to anything (29%), while 20% said the process was too complicated and complicated / or time consuming.

Almost half of all respondents said they feared that by filing a claim they might find that they owe revenue, and not the other way around.

Ms. Ryan says the number of times this happens is “tiny”.

And if there is ever an instance where a person has money it is usually made up for by the refund they are due.

“If you only pay for a GP visit once a year, you owe a tax refund,” says Ms. Ryan.

It really is a case that people are just not aware of their claims.

“There are so many different tax breaks that people can often get refunds for transactions or services they would never expect.

“These can range from more frequent tax expenses such as medical and medical fees or tuition to flat-rate expenses, IVF treatment relief, caregiver tax credits, and overpaid USC.”

The survey found that over the past five years the number of people saying they want to “pay their fair share of taxes” has skyrocketed.

“While there is no way to know for sure what is responsible for this movement,” says Ms. Ryan.

“Perhaps what we’ve all seen in the past 12 months plays a role – paying wage subsidies from finance kept people and households afloat when they might otherwise have been in financial distress. Now more people are realizing the importance from taxes on. “

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