Negotiations on how to provide tax relief or a financial boost to people working from home are expected to continue in the coming days as Budget 22 is finalized.
Tánaiste and Business Minister Leo Varadkar have signaled in recent weeks that workers can expect some sort of announcement on Tuesday on how the government intends to promote remote working.
“There will be a tax package in the budget of around 500 million euros, most of it will be used to index tax credits and brackets making sure that if people get a pay raise over the course of the coming year they will be able to keep most of it and not lose most of it to taxes and this is important in a time of high inflation, ”said the head of Fine Gael during ‘a recent trip to the United States.
What we would like to do is have a system whereby if someone works from home and incurs costs, especially utility costs, they would be able to defray them in some way or form. another from the tax he pays. This already exists but has not been updated for many years.
The options currently being considered were part of a series of potential measures published in a finance ministry document last month.
It is understood that the final negotiations will now focus on two options, namely:
- A) Allow workers to recover 20 to 30% of their energy bills against taxes
- B) Increase in the daily homework allowance paid by some employers
Under current rules, Revenue allows people working remotely to claim tax relief on additional costs associated with working from home, including electricity and heating.
The rate you can currently claim is 10% of the total amount of utility bills over your taxes.
You can also claim 30% of the broadband costs for the tax year. This was introduced as a Covid-19 measure and was expected to last for the duration of the pandemic. No end date has been given and it is understood that discussions are underway to make it a permanent feature.
Regarding option B, it is understood that the government is considering increasing the rate of € 3.20 currently paid by many companies to cover costs incurred by their employees working from home.
While it is likely that hundreds of thousands of workers will receive this payment, no data is available on the exact amount, as companies are not required to notify the tax authorities if they do. Employers are not legally required to pay it.
There are pros and cons around either option.
Some officials have reportedly expressed concern that increasing the percentage a person can claim on their bills could encourage people to be less careful about their household energy use.
The unions have also argued that the system is cumbersome, because the timing of the tax break does not necessarily coincide with the time the utility bills arrive – instead, workers must wait until the end of the day. ‘exercise to claim.
The argument for increasing the daily amount by € 3.20 is that it would eliminate the need for workers to track their energy and broadband costs.
It is proposed that they can self-assess and track the number of working days from home, as many companies are moving to a so-called hybrid model with certain periods of the working week spent in the office.
If the government opts for an increase in employers’ remuneration, it is not envisaged that it will be compulsory for companies, except perhaps if they force their employees to work only at home.
A document from the tax strategy group of the Ministry of Enterprise, Trade and Employment found that increasing the tax break on energy bills from 10% to 30% would cost in the range of 8.6 million euros.
This is based on 400,000 people claiming relief for two days each week for 46 weeks each year.
Of course, this is just one area where we can expect announcements next Tuesday.
Here’s a rundown of what else you’re likely to see in the budget:
There will be minimal changes to income tax in Budget 2022.
Leo Varadkar said it was necessary to protect average incomes from inflation and the rising cost of living. Inflation is expected to peak above 4% in the last quarter of the year, before falling below 2% in the third quarter of 2022.
This will be done by indexing tax credits and tax brackets. This could involve increasing the threshold at which the higher income tax rate is applied and increasing the entry point for USC.
The carbon tax will be increased by an additional € 7.50 this year to € 41 per tonne.
This will increase the cost of gasoline, diesel and home heating fuels. Despite calls for it to be postponed this year due to the rising cost of energy, with the Green Party in government this is highly unlikely.
The government aims to tackle the problem in the budget by increasing the fuel allowance by a planned amount of € 5.
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Alcoholic drinks and cigarettes
Due to the immense difficulties faced by the pub and restaurant business over the past year, the price of alcohol is not expected to increase this year.
Typically, the price of cigarettes has increased year by year, and it could be the case again.
Social Protection Minister Heather Humphreys has said she will focus on the vulnerable and hopes to improve the situation for those dependent on social assistance benefits in this year’s budget.
There have been indications that there may be an increase in the Jobseeker’s Allowance, given the increase in the cost of living, and also due to the decrease in unemployment benefit in pandemic case (PUP) that has been paid at a higher rate than job seekers over the past year.
Varadkar recently told Dáil that an increase in the current minimum wage is needed as the cost of living increases.
It is currently € 10.20 but there is no indication of what it could amount to.
There has been no increase in pensions over the past two years.
Again due to the rising cost of living, it should increase by at least $ 5.
The government wants to do something in this budget for parents who pay for child care. Speaking to reporters yesterday in Leitrim, Varadkar said:
“What I can say is that one of the things that of course we’re going to look at in the context of the budget is the cost of child care.
“This is still the case for a lot of people [that] child care is like paying two mortgages or having to pay rent twice a week and it is also, from a business and employment perspective, a barrier to returning to work. We have skills shortages throughout the economy.
“Many parents, especially women, but not exclusively women, cannot re-enter the workforce because of the cost of childcare. So I think this is something that you will see the government focus on in the years to come. “