Welcome to the Summer edition of our Newsletter.
Last Thursday saw the introduction of the July Job stimulus and while not all the detail is yet known, our view here in Guardian is that it is overall very positive. Here is a summary of what was announced, and we will issue the detail when we receive it – the legislation is due to go through the Houses of the Oireachtas later this week.
The Replacement of the Temporary Wage Subsidy Scheme
As 31st August approaches, it was expected that the TWSS would either be replaced or at least modified, to reflect that many people had either returned to work, or now could work remotely, as businesses re-opened and demand returned. So the tweaking of this scheme is twofold:
- Subsidies of between €203 and €151.50 gross per week (depending on the persons pay) will be paid to eligible businesses “for each qualifying employee”.
- If an employer takes on a new employee and pays them between €7,878 and €76,024, the employer shall receive a subsidy of €151.50 – €203 per week. The subsidy will be related to the employee’s wages, and is a subsidy support scheme rather than an income replacement measure. Proprietary directors (i.e. those owning more than 50% of the shares in a company) are not eligible. Some directors owning less than 50%, may still be deemed ineligible.
- In order to qualify for the EWSS a business must demonstrate that its turnover is no more than 70% of the comparable figure for 2019 range 1st July – 31st December.
Pandemic Unemployment Payment
- The scheme is extended up to 1st April 2021.
- The top rate of €350 is now reduced to €300.
- The amount receivable will be dependent on the persons pre-pandemic earnings.
- For those who earned between €200 and €300 pre-covid their new payment will be €250.
- Those who earned less than €200 pre-pandemic will continue to receive €203.
- The scheme will close to new entrants from 17th September.
There will be further changes in February 2021, and then the scheme will end in April 2021.
Tax Relief for Sole Traders/Self Employed
Sole traders, in my opinion, were not very well supported in the previous measures. The Government have now addressed this by essentially allowing you use the losses (up to €25,000) you expect to make in 2020, to be offset against the actual profits you made in 2019, thus reducing your tax payment that you traditionally pay in October/November each year.
There will be a 6 month reduction in the standard VAT rate from 23% to 21% effective from 1st September 2020. This will help businesses who cannot reclaim VAT, or are not VAT registered, by a reduction on their costs, but for others, it will merely be a cash flow saving, UNLESS the business maintains its selling price, and thus retains the additional 2% as profit for themselves.
If business do reduce their prices by 2%, the hope is that this will increase personal spending and stimulate demand on consumer goods, and thus aid the economic recovery.
Online Retail Scheme
Many of our clients availed of this scheme to enhance and e-commerce enable their website. A further €14.5m has been added to the previous €5.5m scheme.
These had been waived for 3 months – it’s now increased to 6 months.
€2 billion on credit guarantees is being made available for businesses. The Government will now guarantee up to 80% of funds borrowed for amounts between €10,000 and €1m, up to a maximum term of 6 years. The interest rate is standard bank borrowing rates +0.5%.
Again, my advice on this is to consider carefully before you borrow – do not put good money after bad, just because it may be a low rate and/or only require you to guarantee 20% of the monies borrowed.
Business Restart Grant
Many of our clients availed of this scheme and have already received the grant of up to €10,000. The maximum claimable is now increased to €25,000, and the minimum is increased to €4,000 from €2,000, so get ready to re-apply those who have already received the previous maximum €2,000 to get your additional €2,000.
Bike to Work Scheme
The amount increased to €1,250 for a standard bike or €1,500 for an electric bike. You may now also avail of the scheme every 4 years rather than 5 years.
Holiday at home…
If you decide to risk a holiday in Ireland between 1st October 2020 and 30th April 2021, you will receive a voucher up to a maximum of €125 on spending of €625 in restaurants, cafes, hotels and B&B’s. Similar to the current rules regarding pubs, you have to have food with your drink, if you wish to avail of the 20% rebate. This will be of great assistance to many of our clients in the hospitality sector.