More than 18 months after many companies began remote working, Budget 2022 is set to bring some financial relief to workers.
Budget 2022 signals major support for remote working with the inclusion of an income tax reduction of up to 30pc for utility expenses.
In his Budget speech this afternoon (12 October), Minister for Finance Paschal Donohoe, TD, said remote working can become part of a better work-life balance.
“Government policy is to facilitate and support remote work and, in this regard, I am announcing an income tax deduction amounting to 30pc of the cost of vouched expenses for heat, electricity and broadband in respect of those incurred while working from home.”
The measure has been largely welcomed by industry experts and other major players, including video-conferencing giant Zoom.
The platform that has been used far and wide for staying connected to colleagues since the beginning of the Covid-19 pandemic welcomed the supports, which will help in the continued implementation of Ireland’s National Remote Work Strategy.
Zoom’s government relations director for Ireland, Charlotte Holloway, said the latest measures represent “a raft of visionary policies” to help make remote working a key part of life after the pandemic.
“This approach is fast becoming an international example that countries right around the globe are looking to, as governments and businesses alike look to support workforces with the right policies and technologies to equip them for the ‘new normal’,” she said.
Ireland’s Association of Chartered Certified Accountants (ACCA) has also broadly welcomed Budget 2022 and said it offers a “fair and balanced approach” for both SMEs and PAYE workers in a challenging environment.
In a pre-budget submission, ACCA had called on the Government to introduce a remote working fund to help support small businesses in adopting a sustainable remote working model for employees.
Caitriona Allis, head of ACCA Ireland, said the commitment to remote working in today’s Budget will support economic regeneration particularly in rural parts of Ireland. “However, ACCA calls for a more streamlined process when claiming these tax credits to support maximum uptake by PAYE workers,” she said.
A drop in the ocean
While the Government’s focus on remote working is evident in Budget 2022, some experts have expressed concern that will not be enough.
Marian Ryan, consumer tax manager at Taxback.com, said that while the tax reduction will be welcome news to those who work from home, the monetary impact will not be that significant, especially for lower income workers.
“Everyone will have different working from home costs but based on the assumption that people are paying average utility costs of approximately €1,000 for heating and electricity and €600 for broadband, then the increase in relief will benefit higher rate taxpayers by about €103 and lower rate taxpayers by about €51,” she said.
“This is certainly a move in the right direction to support the migration from office to remote working, but we would certainly hope to see greater incentives and reliefs introduced in the coming years.”
Rachel Dillon, head of mobility at EY Ireland, agreed that it was a welcome step in the right direction. However, she warned of another issue that employers need to bear in mind as remote working continues.
“While there is certainly an increasing demand from employees for flexible working arrangements, employers need to remember that facilitating international remote working arrangements outside the country of employment can give rise to complexity, including additional employer compliance requirements,” she said.
What should workers do?
While Budget 2022 does not require any immediate action for PAYE workers, Ryan urged those who are remote working to utilise every relief to which they are entitled.
“According to the Revenue in a Tax Strategy Group paper on working from home, 875,000 people have been remote working, but just 90,000 people made a claim for tax relief for working from home as of May this year,” she said.
“We need to do more to call people to action. Some simply don’t know about the reliefs, while others may believe it’s too much hassle to claim. But this is money for jam, and what we have found is that claiming tax back is habitual – so those who don’t claim now are unlikely to claim when even more lucrative reliefs are introduced at a later date.”
Workers can claim remote working relief on the Revenue website, which also has instructions on how to do so.
Ryan added that while there is a bit of legwork involved, “it’s definitely not the time-consuming, convoluted task that people seem to think it is”.
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