The biggest budget package ever announced came this week as the Government try to put supports in place to tackle two massive challenges – COVID-19 and Brexit.
The headline items affecting small businesses are included below.
- Sole traders can earn up to €480 per month AND keep their Pandemic Unemployment Payment (PUP).
- Increase of €150 in the Earned Income Tax Credit for the self employed (i.e more money in your pocket).
- There will be a VAT rate reduction for parts of the tourism and hospitality sector including short term accommodation, restaurants, cinemas, theatres, hairdressers and barbers. The rate will go from 13.5% to 9%.
- The Employment Wage Subsidy Scheme (EWSS) will continute until at least 31st March 2021. Further arrangements will be put in place at this point if necessary.
- The tax warehousing facilities that were in place for VAT and Employer PRSI have been extended to income tax and temporary wage subsidy scheme repayments. If a sole trader cannot afford to pay their tax bill by the 10th December, they can apply for it to be warehoused (i.e payment can be deferred) interest-free for up to one year. It applies to both 2019 tax liability and 2020 preliminary tax. This is fantastic for those struggling with cashflow issues but I would advise business owners to exercise caution where utilising this. The debt will have to be paid eventually and will be overlaid with 2020 tax liabilities in a year’s time so bear this in mind.
- A new compensation scheme has been announced called the COVID Restrictions Support Scheme (CRSS). This scheme is to support businesses where the Government restrictions directly prohibit or restrict access by customers. It applies when Level 3 (or higher) restrictions are in place and the scheme automatically ends when the restriction period ends. Currently it applies to accommodation, food and the arts, recreation and entertainment sectors but this may be extended to other sectors going forward. Businesses must have endured at least an 80% reduction in turnover to qualify. It takes the form of a cash payment calculated on the basis of 10 percent of the first €1 million in turnover and 5 percent, thereafter, based on average VAT exclusive turnover for 2019. Maximum weekly payment is €5,000 and will be administered by Revenue. More details to follow in the Finance Bill on 22nd October 2020.
Further details contained on the Revenue website.