Changes to Tax Allowances
Squeezing the Squeezed
There were some financially negative headlines this week, with publications announcing that many thousands of Irish workers now find themselves in the firing line for an apparent “tax grab” which would affect some of the lower paid PAYE workers in our country, ranging from employees of the hospitality sector (who already find themselves in hot water following the changing of their VAT regulations in this year’s Budget announcement) to construction workers and teachers.
Reports suggest that the Revenue Commissioners find themselves under fire for this apparent attack on our lower paid workers as it moves to take annual tax allowances away from these people from January 1st. This comes on the back of the Finance Minister being accused of not doing enough to protect the “squeezed middle” during the Budget announcements, and adds fuel to the fire of the public belief that the Government seeks to protect only the very wealthy in society.
As we have discussed in the past, the Revenue system has been undergoing a major overhaul in recent months, with a clamp down on tax fraud and evasion as well as changes to the online services and a general overhaul of Irish tax affairs. As a result of this, and following on from the taxation changes to be made in the hospitality sector, it is now reported that Revenue are beginning to look closely at other sectors to review the current flat-rate tax scheme.
This scheme is intended to cover some costs for workers such as tools and uniforms etc. By reducing the portion of income that a worker is required to pay tax on, this is intended to allow these costs to be covered without interfering directly with the worker’s take home pay. It is estimated that over 500,000 Irish PAYE workers currently avail of this scheme. Teachers and construction workers could find themselves the hardest hit by this change.
As of right now, there is no concrete information on these changes, and it will doubtless be ill-timed as it will eliminate any gains felt by the Budget for many employees. The only word from the Revenue Commissioners at present is that all allowances paid to all categories of staff who are eligible to claim tax relied will be examined as the review continues.
Should you have any concerns, queries or require further information on these or any other business and financial matters please don’t hesitate to contact us we are always available to help.
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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY
*Note: Since time of writing, new information has surfaced, suggesting that the Government may delay the implementation of the below until 2020, we will give more information on this when confirmed