Budget 2022: Employment Taxes

13 Oct 2021 | 10.47 am

Budget 2022: Employment Taxes

EWSS will begin to taper from December 2021

13 Oct 2021 | 10.47 am

There will be no “cliff-edge” end to the Employment Wage Subsidy Scheme, writes KPMG partner Eoghan Quigley (pictured)

Employment Wage Subsidy Scheme (“EWSS”)

A central element of the Government’s response to the pandemic was the Employment Wage Subsidy Scheme (EWSS), providing much needed cashflow assistance to businesses during the pandemic and maintaining the relationship between the employer and employee.

The minister reiterated the Government’s prior commitment to there being no “cliff-edge” end to the EWSS and announced an extension to the scheme until 30 April 2022, in a graduated form.

The operational aspects of the scheme will remain unaltered until 30 November 2021. Specifically, this means that the enhanced subsidy rates, reduced employer PRSI rate and employer eligibility criteria will remain in operation until this date.

However, for December 2021 to February 2022, a reduced two-rate subsidy structure of €151.50 and €203 per employee will apply.

In the final phase of March and April 2022, a flat rate subsidy of €100 per qualifying employee will be paid. Further, there will be a return to full rates of employer PRSI, with effect from March 2022.

Finally, the minister announced that the scheme will not be open to employers who have not availed of EWSS by 31 December and so new entrants will not be permitted to avail of the scheme after this date.

Remote Working

Covid-19 has fundamentally changed the way in which we work and indeed from where we work. As a result, employers and employees across the country had to adapt very quickly to remote working.

In a clear recognition that this trend is set to continue the minister announced an enhancement to the current working from home income tax reliefs with a promise of formal legislation to support the future of remote working by employees.

In light of Government policy to facilitate and support remote working, the current tax arrangements for working from home will be enhanced and formalised so that an income tax deduction of 30% of the cost of vouched expenses for heat, electricity and broadband in respect of days spent working from home can be claimed.

Benefit in Kind (BIK) on Electric vehicles

The BIK tax on the provision of electric company cars by employers to employees exemption will be extended out until 2025.

Employees who are provided with an electric vehicle with an open market value (OMV) of €50,000 or less are entitled to an exemption from a BIK charge. For vehicles with a higher OMV the amount of €50,000 is reduced from this value to provide the basis for the BIK calculation.

There will, however, be a tapering effect on the vehicle value for BIK purposes with effect from 2023. The OMV will decrease to €35,000 for 2023, €20,000 for 2024 and €10,000 for 2025 which will result in an increased BIK amount payable by employees.

Employer PRSI

The Budget provided for an increase in the employer PRSI threshold from €398 to €410 from 1 January 2022. This aligns the employer PRSI threshold with the salary/wages of a full-time employee earning the minimum wage.

Pic: Patrick Bolger

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