ISSUE 5 - March 2022
EMPLOYMENT
TAXES Current State of Play Claire Davey of KPMG
Head of employment and personal tax compliance
At the time of writing this article, there is a strong sense of positivity that an end to Covid-19 is on the horizon, and with it a renewed sense of optimism that we can once again imagine a world without social and economic restrictions.
These Covid income support schemes have been instrumental in serving to keep many businesses operational whilst also supporting job retention and income protection for employees.
Such restrictions fundamentally changed our daily lives and routines unlike we have ever witnessed before, and Irish employers who were required to adapt quickly to these changes and respond nimbly to a constantly evolving employment tax landscape, were no exception.
For employers already availing of EWSS on 31 December 2021, the scheme is due to close on 30 April 2022 with a phased exit scheme.
Whilst this new environment set forth many challenges for employers, it also provided many opportunities for employers to reshape their existing work practices, employment tax models and attract a broader talent pool. Understanding the many employment tax changes, including temporary Covid concessions introduced at the early stages of the pandemic, was important and necessary to help employers manage their compliance obligations effectively during the pandemic and minimise the cost impact to their business. As Ireland reopens and restrictions are eased it is imperative for employers to keep abreast of any employment tax updates in the area and to ensure they are not relying on Covid concessions which are no longer available in practice. This article aims to bring employers up to date on the most recent employment tax developments in the area, as employers look ahead to the future, including recommended actions they should consider in a post Covid environment.
Employment Wage Subsidy Scheme (EWSS)
Central to the government’s response to the serious impact of the pandemic has been the EWSS and its predecessor, the Temporary Wage Subsidy Scheme (TWSS), which has provided much needed cashflow assistance to employers, amid difficult trading conditions. 16
Principally, following the recent Finance Act changes, the enhanced wage subsidy rates have been reduced for February and further again for March and April to a flat rate subsidy of €100 per week per qualifying employee, with a return to full rates of employer PRSI, with effect from March 2022. Helpfully, in response to the Public Health Regulations (PHR) in place between 20 December 2021 and 22 January 2022, Revenue announced some variations to the phased exit for employers directly impacted by these restrictions. This typically includes businesses in the hospitality sector, e.g., hotels, restaurants, bars, wedding venues etc. For such employers they should review their situation to determine whether they qualify for the enhanced rates for an additional month to 28 February 2022, and also for an extension to the conclusion of the scheme to 31 May 2022.
Benefit in Kind (BIK) Covid Concessions
The taxation of BIKs has seen some temporary Revenue concessions being applied “for the period of the Covid-19 restrictions”. Until recently it was unclear precisely when these concessions would be withdrawn. Following a Revenue announcement in December 2021 some clarity has now emerged, and so employers need to be aware of these details in order to ensure accurate and timely operation of their payroll going forward. A brief summary is provided overleaf:
