The Government’s July Stimulus package includes a range of measures to help businesses impacted by COVID-19 to re-open and get people back to work.
Here we explain in detail the tax measures introduced that your business may be able to avail of:
1. Temporary income tax relief for self-employed
Self-employed individuals who made a profit in 2019 but will incur losses in 2020 can carry back a maximum of €25,000 of 2020 losses (and certain capital allowances) to reduce their 2019 taxable profits.
You can make a claim for income tax relief by amending your Form 11 for 2019.
Where 2020 accounts are not yet finalised individuals can carry back estimated losses in order to get some relief against 2019 profits, subject to certain conditions being met.
2. Temporary acceleration of corporation tax loss relief
A further temporary measure which accelerates the ability of companies to claim relief for projected losses in 2020 against 2019 profits has also been introduced. Under normal Corporation Tax rules companies could carry back losses against profits of the previous accounting period but would have to wait up to 9 months after the accounting year end to avail of this relief.
Under these new proposals, however, companies can project the expected losses for the current accounting period and make an early claim to have those losses offset against any profits in their previous accounting period thereby potentially triggering some much needed tax refunds for the company.
The maximum amount of the estimated loss which qualifies for early carry-back is 50% of the total projected loss for the accounting period. Once the accounts for the current period have been finalised then the balance of any losses not utilised under the accelerated claim can be claimed under the normal loss relief rules for companies.
3. Tax Debt Warehousing
Under the Tax Debt Warehousing arrangement during any period of restricted trading due to COVID-19 and for 12 months after a business resumes trading, there will be no interest charged on unpaid VAT and PAYE tax bills that arose from the COVID-19 crisis. After this time there will be a lower interest rate of 3% per annum on the repayment of these outstanding warehoused tax debts. This compares to a rate of 10% per annum normally or otherwise due on overdue VAT and PAYE.
Businesses availing of Debt Warehousing must continue to file their VAT & PAYE tax returns so the full the amount of debt warehoused is known and they should continue to file their tax returns on time and pay current liabilities as they arise.
Tax clearance will not be affected by a business availing of tax debt warehousing under this arrangement.
4. Reduced interest for outstanding non COVID-19 debts
A reduced interest rate of 3% per annum has been introduced for outstanding non Covid-19 tax debts. This compares to a rate of 8% and 10% per annum normally.
Business must have a phased payment arrangement in place with Revenue by 30 September 2020 to avail of the reduced rate.
5. VAT Reduction
The standard rate of VAT will be reduced from 23% to 21% for 6 months, beginning on 01 September 2020.
A further measure announced by the Government which businesses can also avail of is the new Employment Wage Subsidy Scheme (EWSS) which will come into effect on 01 September 2020. Read more in our dedicated article here.
Your accountant should be able to assist you with accessing these new measures.
At TaxAssist Accountants we have already begun helping our clients, all over the country, to avail of these new tax reliefs. We are always happy to accept new clients and we offer an initial free consultation. Click here
to arrange your consultation.
Last updated: 13th August 2020
This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.