Written Answers Nos. 51-70
51. Deputy Catherine Connolly asked the Minister for Finance the analysis his Department has carried out into the cost of including outdoor activity businesses in the Covid restrictions support scheme; and if he will make a statement on the matter. [1937/21]
View answerThe Covid Restrictions Support Scheme (CRSS) is a targeted support for businesses significantly impacted by restrictions introduced by the Government under public health regulations to combat the effects of the Covid-19 pandemic. The support is available to companies, self-employed individuals and partnerships who carry on a trade or trading activities, the profits from which are chargeable to tax under Case I of Schedule D, from a business premises located in a region subject to restrictions introduced in line with the Living with Covid-19 Plan.
Details of CRSS were published in Finance Act 2020 and detailed operational guidelines, which are based on the terms and conditions of the scheme as set out in the legislation, have been published on the Revenue website at: https://www.revenue.ie/en/corporate/press-office/budget-information/2021/crss-guidelines.pdf
To qualify under the scheme a business must, under specific terms of the Covid restrictions, be required to either prohibit or significantly restrict, customers from accessing their business premises to purchase goods or services, with the result that the business either has to temporarily close or to operate at a significantly reduced level. For the purposes of CRSS, a qualifying “business premises” is a building or other similar fixed physical structure in which a business activity is ordinarily carried on.
Where a business does not ordinarily operate from a fixed business premises, such as an outdoor activity centre, that business will not meet the eligibility criteria for CRSS.
The scheme is not sector-specific and no analysis has been carried out in relation to businesses who do not qualify for CRSS.
Businesses who do not qualify under this scheme may be entitled to support under various measures put in place by Government, including existing supports available under the COVID Pandemic Unemployment Payment (PUP) and the Employment Wage Subsidy Scheme (EWSS) and the range of measures announced as part of Budget 2021 to support particular sectors including Tourism and live entertainment. They may also be eligible to warehouse VAT and PAYE (Employer) debts and also excess payments received by employers under the Temporary Wage Subsidy Scheme, and the balance of Income Tax for 2019 and Preliminary Tax for 2020 for self-assessed taxpayers if applicable.
The Government will continue to assess the effects of the Covid-19 pandemic on the economy and I will continue to work with Ministerial colleagues to ensure that appropriate supports are in place to mitigate these effects.á
52. Deputy Fergus O'Dowd asked the Minister for Finance if matters raised by a person (details supplied) in correspondence in respect of benefit-in-kind concerns will be addressed; and if he will make a statement on the matter. [1946/21]
View answer55. Deputy Éamon Ó Cuív asked the Minister for Finance if he plans to amend the law on benefit-in-kind for having a company car for the duration of the Covid-19 pandemic in view of the Government's requests and restrictions limiting travel which, unless the law is amended, will put a large financial burden on those who have the use of a company car; and if he will make a statement on the matter. [2041/21]
View answer61. Deputy Denise Mitchell asked the Minister for Finance his plans in changing tax rules regarding benefit-in-kind for those who have a company car given the current circumstances; and if he will make a statement on the matter. [2134/21]
View answer65. Deputy Ged Nash asked the Minister for Finance if he will re-introduce the Covid-19 BIK concession for employer-provided vehicles wherein an employer allows private use of a vehicle (details supplied) which lapsed on 31 December 2020 in view of the current restrictions; and if he will make a statement on the matter. [2145/21]
View answerI propose to take Questions Nos. 52, 55, 61 and 65 together.
In March 2020 Revenue introduced a short-term concessionary measure in relation to the operation of benefit-in-kind (BIK) on employer-provided vehicles having regard to the unprecedented situation arising as a result of the COVID-19 pandemic.
The concessionary treatment applicable to BIK on employer-provided vehicles, along with all other COVID-19 related measures, is kept under regular review by Revenue. In early December 2020, and as the public health restriction at the time began to ease and businesses reopen, Revenue confirmed that the concessionary measure related to employer-provided vehicles would cease to apply on 31 December 2020 and, with effect from 1 January 2021, BIK on same should be calculated in the usual manner.
However, since then, Level 5 public health restrictions have been subsequently introduced. On 24 December 2020, all restaurants, cafés and gastro pubs as well as personal services, such as hairdressers, beauticians and barbers closed, while hotels, guesthouses and B&Bs remain open but are restricted to essential non-social and non-tourist services only. Additionally, on 31 December all non-essential retail as well as gyms, leisure centres and swimming pools closed. For employees, the public health advice is to work from home in all instances unless work is an essential health, social care or other essential service that cannot be done from home.
Having regard to the current public health restrictions, the short-term concessionary measures announced back in March will remain in place. This means that, for the time being:
- Where an employer takes back possession of the vehicle and an employee has no access to the vehicle, no BIK shall apply for the period.
- Where an employee retains possession of a vehicle, but the employer prohibits the use of the vehicle , no BIK shall apply if the vehicle is not used for private use.
- Records should be maintained to show that the employer has prohibited its use and no such use has occurred, for example communication from employer, photographic evidence of odometer, etc.
Where an employee has a car provided by his or her employer and
1. the circumstances in the previous example don’t apply,
2. limited or reduced business mileage (if any) is undertaken due to the COVID-19 crisis, and
3. personal use is limited
the amount of business mileage travelled in January 2020 may be used as a base month for the purposes of calculating the amount of BIK due. Thus, the percentage applied in the calculation of the cash equivalent, which is based on annualised business mileage, may have regard to the actual business mileage for January 2020, for the current period of the COVID-19 restrictions. Appropriate records should be kept, for example business mileage travelled in January, amount of private use, photographic evidence of odometer etc.
Revenue’s website will shortly be updated accordingly.
Due to the nature of the Covid-19 pandemic it is not known how long any COVID-19 restrictions will ultimately remain in place. Revenue will however continue to regularly review all COVID-19 related matters (including the provisions relating to BIK on employer-provided vehicles) and if any further measures are considered necessary in the future, updated guidance will be made available by Revenue in relation to same as soon as possible.
53. Deputy Emer Higgins asked the Minister for Finance the way new companies can determine their eligibility of wage subsidy scheme if they were not in operation one year ago; and if he will make a statement on the matter. [1961/21]
View answerThe Employment Wage Subsidy Scheme (EWSS) is an economy-wide scheme that focuses primarily on business eligibility, delivering a per-head subsidy on a flat rate basis to the employer.
The EWSS “turnover test” has been specifically designed so as to target the subsidy at otherwise viable employers whose businesses continue to be adversely impacted by COVID-19 by requiring a comparison of the firm’s pre-pandemic operations with their current operations. The legislation provides that the employer must be able to demonstrate that they are operating at no more than 70% in either the turnover of the employer’s business or the customer orders received by the employer in Q1 and Q2 2021 compared with the same period in 2019.
Flexibility has been built into the turnover test for businesses who were not in operation a year ago. As set out in the legislation, the reduction in turnover or customer orders between 1 January and 30 June 2021, may be shown compared to the:
- same period in 2019, where the business operated for the whole of the comparable period in 2019;
- period from the date of commencement to 30 June 2019, where the business commenced trading between 1 January and 1 May 2019; or
- projected turnover or customer orders from 1 January 2021, or date of commencement, to 30 June 2021, where business commenced after 1 May 2019. (This is compared to what the projections may have been if COVID-19 had not occurred.)
The EWSS is operated by Revenue and detailed guidance on the operation of the scheme is published on their website.
54. Deputy Emer Higgins asked the Minister for Finance his engagement with the banks on business loans which many closed businesses will find difficult to repay at present; and if he will make a statement on the matter. [1963/21]
View answerOn 18 March last the Banking and Payments Federation of Ireland (BPFI) announced a coordinated approach by banks and other lenders to help their customers who were economically impacted by the Covid-19 crisis. The measures included flexible loan repayment arrangements where needed, including loan payment breaks initially for a period up to three months and then subsequently extended for up to six months. The implementation of this voluntary moratorium by the banking industry was a flexible response to the emerging COVID-19 crisis and ensured that a large volume of affected customers could benefit quickly during a fast moving and evolving public health crisis.
I along with the Tánaiste and Minister for Enterprise, Trade and Employment with the Minister for Public Expenditure and Reform have met the banks on a number of occasions last year to discuss a range of issues including business loans and related matters. Furthermore, my officials in the Department and representatives of the SBCI are in regular contact with the banks.
The Deputy may wish to note that borrowers whose payment break has ended are being given an option to return to full repayments based on the same term of the loan or to extend the term of the loan or to engage further with their bank on suitable arrangements. On 30 November last, the BPFI reported that approximately 49% of SMEs returned to repaying on the existing term whilst 46% returned to repaying on extended term basis and just over 5% are not making full repayments.
The Central Bank has confirmed that there is no regulatory impediment to lenders offering payment breaks to borrowers, providing they are appropriate for the individual borrower circumstance. The BPFI has also reiterated in recent days that standard payment breaks continue to be part of the wide range of tailored solutions which are being made available to customers upon assessment of their situation.
SME borrowers have regulatory protections via the Central Bank's SME lending regulations. The SME Regulations https://centralbank.ie/news/article/regulations-for-firms-lending-to-smes-from-2016 set out the required treatment of SMEs by regulated entities in relation to various aspects of business lending. This includes detailed provisions around the credit application process, requirements regarding security or collateral, credit refusals and withdrawals, handling complaints, managing arrears and having in place policies for engaging with SMEs in financial difficulty. The options could include additional flexibility, and this could be a short-term arrangement such as additional periods without payments or interest-only repayments, or if appropriate more long term arrangements.
In addition, Credit Review https://www.creditreview.ie was established to assist those SMEs and farm borrowers that have had credit applications of up to €3 million refused or indeed an existing credit facility withdrawn or amended by the participating bank. SMEs can apply to Credit Review after exhausting the internal appeals process in the participating institution, which are currently AIB, BOI, Ulster Bank and Permanent TSB.
Through ongoing engagement with the BPFI and lenders, the Central Bank is working to ensure that borrowers affected by COVID-19 continue to be supported through this period of unprecedented stress. The Central Bank recently wrote to all lenders indicating that lenders are to ensure that they have sufficient expert resources to assess individual borrower circumstances, and to offer appropriate and sustainable solutions to affected borrowers in a timely manner in line with regulatory requirements. The Central Bank’s clear expectation is that lenders engage effectively and sympathetically with distressed borrowers.
I will continue to work with the Central Bank, as regulator, to ensure that the Central Bank consumer protection and other applicable frameworks will be fully available to all borrowers that will still need support.
56. Deputy Brendan Griffin asked the Minister for Finance if he will review the situation for retailers who import used vehicles from the UK subjected to a new 10% tariff (details supplied); if he has considered the impact of this new tariff on the livelihoods of persons involved in used car retail throughout Ireland; and if he will make a statement on the matter. [2055/21]
View answerI am advised by Revenue that the Union Customs Code (UCC) sets out the legal framework for customs rules and procedures in the EU. With the departure of the UK from the EU, the UK became a 3rd country for the purposes of trade with the EU and therefore customs formalities apply. This includes the payment of customs duties and other taxes where applicable. Customs is an EU competence and applies in all Member States and it is not possible for me to make changes in relation to customs matters insofar as charges and duties and when they are payable.
However, the EU-UK Trade and Cooperation Agreement provides for zero rates of duty where rules of origin requirements are met. The detailed rules that relate to each product type, including vehicles, are contained in the agreement. Where those conditions are met, a claim for preferential treatment can be made on the import declaration for the good or product concerned. The Deputy should be aware that relief from duty is possible where a vehicle is of UK origin and can be demonstrated as such in accordance with the relevant procedures for determining the origin of goods. The Deputy will appreciate that the UK’s departure from the EU significantly changes the business environment for a number of sectors and the sale of second-hand cars sourced in the GB is one of those sectors.
57. Deputy Robert Troy asked the Minister for Finance the actions being taken by his Department in conjunction with the Central Bank to ensure that those who are currently in receipt of an employment wage subsidy scheme payment can get mortgage approval or draw down a mortgage which has previously been approved. [2056/21]
View answerSince the COVID-19 situation first arose, I have maintained contact with the BPFI and lenders on the measures they have put in place to assist their customers who are economically impacted by the pandemic. In relation to the particular issue of new mortgage lending, the main retail banks previously confirmed that they are considering mortgage applications and mortgage drawdowns in relation to their customers who were on the Employment Wage Subsidy Scheme on a case by case basis and that they are taking a fair and balanced approach. Lenders continue to process mortgage applications and have supports in place to assist customers impacted by COVID-19. Therefore, if mortgage applicants have any queries or concerns about the impact of COVID-19 on their mortgage application, they should in the first instance contact their lender directly on the matter.
However, there are certain consumer protection requirements which govern the provision of mortgage credit. For example, the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 (CMCAR) provide that, before concluding a mortgage credit agreement, a lender must make a thorough assessment of the consumer’s creditworthiness with a view to verifying the prospect of the consumer being able to meet his or her obligations under the credit agreement. The CMCAR further provide that a lender should only make credit available to a consumer where the result of the creditworthiness assessment indicates that the consumer’s obligations resulting from the credit agreement are likely to be met in the manner required under that agreement. The assessment of creditworthiness must be carried out on the basis of information on the consumer’s income and expenses and other financial and economic circumstances which are necessary, sufficient and proportionate.
In addition, the Central Bank’s Consumer Protection Code 2012 imposes ‘Knowing the Consumer and Suitability’ requirements on lenders. Under these requirements, lenders are required to assess affordability of credit and the suitability of a product or service based on the individual circumstances of each borrower. The Code specifies that the affordability assessment must include consideration of the information gathered on the borrower’s personal circumstances and financial situation. Furthermore, where a lender refuses a mortgage application, the CMCAR requires that the lender must inform the consumer without delay of the refusal. In addition, the Code requires that the lender must clearly outline to the consumer the reasons why the credit was not approved, and provide these reasons on paper if requested.
Within this regulatory framework, the decision to grant or refuse an application for mortgage credit remains a commercial matter for the individual lender. Also a loan offer may contain a condition that the lender can withdraw or vary the offer if in the lender’s opinion there is any material change in circumstances prior to drawdown. In such cases, the decision to withdraw or vary the offer is also a commercial decision for the lender.
Nevertheless, the Central Bank has indicated that it expects all regulated firms to take a consumer-focused approach and to act in their customers’ best interests at all times, including during the COVID-19 pandemic. If a mortgage applicant is not satisfied with how a regulated firm is dealing with them in relation to an application for credit, or they believe that the regulated firm is not following the requirements of the Central Bank’s codes and regulations or other financial services law, they should make a complaint directly to the regulated firm. If the mortgage applicant is still not satisfied with the response from the regulated firm, he or she can refer the complaint to the statutory Financial Services and Pensions Ombudsman.
58. Deputy Christopher O'Sullivan asked the Minister for Finance the main policy initiatives undertaken by his Department since 27 June 2020; and his main priorities for 2021. [2084/21]
View answerSince 27 June 2020, my Department has undertaken a broad range of important policy initiatives, many of which will remain a priority in 2021.
The main policy initiatives in 2020 included production of Budget 2021 and publication of Finance Bill 2020, as well as preparation of the July Stimulus Bill. Policy options were developed to improve efficiency of tax administration (amendments to encashment tax and Professional Services Withholding Tax regime) and a feedback statement on the EU Anti-Tax Avoidance Directive (ATAD) Interest Limitation Rule was prepared. Tax Strategy Group papers across all tax heads were prepared, and a review of Stamp Duty measures such as farm consolidation relief, Consanguinity relief and the residential stamp duty refund scheme was carried out.
On banking matters, a key focus in 2020 was on responding to the Covid-19 pandemic. This consisted of engaging with industry to ensure that loan payment breaks were provided to customers who were facing difficulties making repayments as a consequence of Covid-19. It also consisted of the finalisation and launch of loan schemes to support SMEs, including the €2bn Covid-19 Credit Guarantee Scheme and the expansion of the Future Growth Loan Scheme in conjunction with the Department of Enterprise, Trade and Employment, the Department of Agriculture, Food and the Marine and the SBCI. A number of EU files were progressed and the transposition of both the Bank Resolution and Recovery Directive (BRRD 2) and the 5th Capital Requirements Directive (CRDV) was completed at the end of 2020.
A review of the Policy Framework for Credit Unions and a review of Resolution and Stabilisation Levies for Credit Unions both commenced in 2020 and will continue in 2021. Legislation to allow for credit unions to convene virtual AGMs was implemented. A Section 24 review of Home Building Finance Ireland commenced in 2020 and will be progressed this year.
My Department worked with the Department of Justice and the Office of the Attorney General to complete the transposition of the Fifth EU Anti-Money Laundering Directive, and the Investment Limited Partnerships (Amendment) Act 2020 was progressed through the Houses of the Oireachtas.
Advancing the new Government’s insurance reform agenda as set out in the Programme for Government is a priority. The Action Plan for Insurance Reform was published in December. Delivery of the Government’s insurance reform agenda, including implementation of the elements of the Action Plan relevant to my Department, will continue to be prioritised in 2021.
My Department is responsible for representing Ireland’s interests in the EU budget process. A comprehensive financial package of €1.82tn was agreed by EU leaders in July 2020, which combines the 2021-2027 Multi-annual Financial Framework (MFF) of €1.074tn, and the €750bn temporary Next Generation EU recovery instrument. The Recovery and Resilience Facility is the key element of the €750bn Next Generation EU plan agreed by the European Council in July.
In my role as President of the Eurogroup, significant agreement was reached at Eurogroup in November 2020 on progressing reform of the European Stability Mechanism and the early introduction of the Common Backstop to the Single Resolution Fund. Into 2021, delivery on the Eurogroup Work Programme and Euro Summit commitments, in particular a time bound work plan on banking union and discussions on the appropriate fiscal stance, will be amongst my main priorities.
In order to protect jobs and workers in the context of Covid-19, my Department managed Ireland’s participation in the European instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE) loan scheme. In the second half of 2020, necessary legislative provisions were put in place at national level and Ireland’s SURE loan application was submitted and approved by the EU. Continued management of Ireland’s participation in the SURE scheme, including finalising the loan drawdown, will remain a priority in 2021.
To protect Ireland’s economic and financial interests in the context of Brexit, my Department was closely involved in the whole-of-government preparation on relevant issues in the EU-UK future relationship, and will continue to strategically engage in international and EU outreach and alliance building to advance our national objectives, including with the UK in the context of the EU-UK Cooperation and Trade Agreement.
As I have already indicated, many of the policy initiatives in 2020 will remain a priority in 2021. As well as Budget 2022 and publication of Finance Bill 2021, production of the Stability Programme Update and the Summer Economic Statement are priorities.
Preparation for reform of the Local Property Tax is on the tax agenda in 2021. In line with the Programme for Government, a Commission on Taxation and Welfare will be established. Implementation of measures will be published in the forthcoming update on Ireland’s Corporation Tax Roadmap, including engagement on EU and OECD proposals in relation to the international taxation framework and the continued transposition of the Anti-Tax Avoidance Directive.
Legislation on banking issues will include progressing the drafting of the Consumer Protection (Regulation of Retail Credit Firms) Bill 2020, the transposition of the Regulations on European crowdfunding service providers for business, the transposition of the Covered Bonds Directive EU 2019/2162, and a Central Bank (Amendment) Bill to introduce the Senior Executive Accountability Regime (SEAR).
Priorities in the area of Financial Services will include satisfactory completion of the Industry migration project regarding the Irish settlement system (Central Securities Depository) and development of an Action Plan for 2021 in relation to the Government’s multi-year strategy for the development of Ireland’s international financial services sector to 2025, Ireland for Finance.
From an international perspective, my Department will put in place the necessary provisions to facilitate Ireland’s participation in the IMF’s New Arrangement to Borrow (NAB) including enabling legislation (subject to Oireachtas approval).
In relation to climate change, my Department will continue to ensure that economic, taxation and financial sector policy interventions support the Government’s climate action agenda including in the implementation of Departmental actions under the Climate Action Plan 2019 and in the drafting of the new Climate Action Plan for 2021. My Department will continue to engage at EU level in the development of sustainable finance and international climate finance in accordance with our policy objectives and will participate in relevant work streams of the Coalition of Finance Ministers for Climate Action on an ongoing basis throughout 2021.
59. Deputy Róisín Shortall asked the Minister for Finance if the pandemic unemployment payment is taxable; if so, the taxes that apply; the way in which it is planned to levy any taxes due for 2020; and if he will make a statement on the matter. [2098/21]
View answerThe Pandemic Unemployment Payment (PUP) is administered by the Department of Social Protection. It is an income support which is taxable and subject to income tax. The PUP follows the general taxation rule for social welfare type payments and is exempt from USC and PRSI charges.
Tax is not collected in real-time through the PAYE system. Instead, liability to tax will be calculated by Revenue through the regular end of year review process. This is being done in order to maximise the amount of financial support provided to recipients at a time when they need such support most.
For 2020, to minimise the end of year tax impact on persons who received payments, Revenue placed them on the ‘week 1/month 1 basis’ of taxation from 21 June 2020. The ‘week 1/month 1 basis’ preserves recipients’ unused tax credits, which can then be offset against any accumulated tax liabilities at year end, including in respect of PUP. Any additional credits that an employee may have, for example health expenses, may also be used to further reduce the accumulated tax liability.
In the case of lower income households or those whose income comprises solely of social welfare payments, a liability to tax typically does not arise because the value of social welfare payments received in a tax year are usually lower than the income sheltered by the main income tax credits. Further, in cases where the tax liability for those payments exceeds unused personal and PAYE tax credits for 2020, the level of income tax due may be reduced if the person has additional tax credits, for example health expenses, to offset.
Revenue will be adopting a fair and flexible approach to collecting tax due on payments made under the PUP.
Revenue has also given assurances that if any income tax and USC liabilities still arise following the allocation of unused credits, it will work with PUP recipients to collect the outstanding liabilities and a number of flexible arrangements may be entered into, including the collection without interest over an extended period of time for 4 years beginning in 2022. The latter will be achieved by reducing taxpayers' credits for subsequent tax years, thereby minimising any financial hardship to the greatest extent possible.
60. Deputy Brendan Griffin asked the Minister for Finance if the construction of a 1,700 sq. ft extension and the complete renovation of a derelict 1,000 sq. ft house constitutes a new build or self-build for the purposes of the help-to-buy scheme (details supplied); and if he will make a statement on the matter. [2115/21]
View answerThe Help to Buy (HTB) incentive is a scheme to assist first-time purchasers with the deposit they need to buy or build a new house or apartment. The incentive gives a refund of Income Tax and Deposit Interest Retention Tax (DIRT) paid in Ireland over the previous four years, subject to limits outlined in the legislation.
I am advised by Revenue as follows:
In addition to the conditions laid down in section 477C Taxes Consolidation Act 1997 (TCA), including that the property is occupied as the sole or main residence of a first time purchaser, section 477C(1) defines a ‘qualifying residence’. The legislation is specific as to the definition of a qualifying residence. It must be a new building which was not, at any time, used or suitable for use as a dwelling. Renovation or refurbishment of old houses to either upgrade or reinstate them for habitation does not qualify for HTB. The previous dwelling must have been demolished and replaced as opposed to being extended/refurbished. In the circumstances where a house was previously used as a dwelling but knocked down and rebuilt, then it is “new”.
Based on the information outlined by the Deputy, it appears that in this case the applicants are renovating and extending an old derelict house, which would not be considered as “new” for the purposes of the HTB scheme and accordingly does not qualify for HTB.
62. Deputy Ged Nash asked the Minister for Finance the status of talks he has held with a group (details supplied) on the future of a bank; and if he will make a statement on the matter. [2140/21]
View answerAs the Deputy will be aware, I have met with representatives from both Ulster Bank and its parent company, NatWest in recent months. My most recent meeting was with the Chair of NatWest on the 17 December where I emphasised that Ulster Bank is an important part of the Irish banking landscape and I reiterated the importance of timely and direct communication between staff, their representatives and management throughout the review, especially if there are any developments. I outlined that I expected that any decisions arising from the review will be swiftly communicated to staff, customers and other stakeholders.
I also met with representatives of Ulster Bank on 21 October. Ulster Bank has confirmed that the strategic review is ongoing and that no decisions have yet been taken. Ulster Bank also confirmed that there is no set timetable for this review and that it is fully aware of the strategically important role that Ulster Bank plays in the provision of financial services to the Irish market.
I emphasised the importance of Ulster Bank to the Irish financial services market, to the wider economy and to the communities it serves. News of the review is, of course, unsettling for all stakeholders, especially the staff and customers.
The continued presence of a viable and active Ulster Bank in the Irish market would be the most welcome outcome. Ulster Bank is a significant employer with 2800 employees and has 88 branches across the country. Ulster Bank is also important in terms of providing competition in the Irish retail banking market. However, as the Deputy will be aware, I have no formal role in the commercial decisions of Ulster Bank, these are a matter for the Board and Management of the Bank and its parent company, NatWest.
In the absence of direct knowledge about NatWest’s strategic review of Ulster Bank’s operations, I cannot and will not comment or speculate on possible outcomes as there is no basis for such speculation, which would be open to misinterpretation.
While I will have further engagement with the bank as the review process continues, I would like to emphasise that I have no role in the review or any commercial decisions arising from it. My officials will continue to monitor developments.
63. Deputy Ged Nash asked the Minister for Finance his plans to legislate to ban digital-only payments; and if he will make a statement on the matter. [2141/21]
View answerAs the Deputy will be aware, there has been a significant increase in the use of electronic, or digital, payments in recent years, and more specifically over the course of the last year.
Notwithstanding the significant increase in the take-up of electronic payments, cash remains a vital part of the Irish payment system. An Indecon report commissioned by my Department in 2019 concluded that a fully cashless society would not be an appropriate objective for policy makers. The Report is available at the following link, https://www.gov.ie/en/publication/f8bfbe-indecon-report-on-benchmarking-of-irelands-payments-industry/
If a retailer specifies in advance of a transaction, for example by displaying signs at the till or at the store entrance, that it will only accept payment by a means other than cash, it is not legally obliged to accept cash as the means of payment and can request the use of an alternative instrument such as a credit or debit card.
My Department supports the work of the European Commission in this area. In September 2020, as part of the EU Digital Finance Package, the European Commission published the Retail Payments Strategy. One of the key aims of the strategy is to maintain access to and acceptance of cash across EU Member States. The strategy recognises the importance of ensuring that there is continued access to cash and that the increased use of digital payment methods does not lead to financial exclusion.
64. Deputy Ged Nash asked the Minister for Finance if he will consider increasing the €3.20 non-taxable rate to a more sustainable and fairer rate given that Ireland is returning to level 5 restrictions and employers will be reliant once more on home working and workers will be using more heat and lighting to do their work from home; and if he will make a statement on the matter. [2144/21]
View answerWhere e-workers incur certain extra expenditure in the performance of their duties of employment remotely or from home, such as additional heating and electricity costs, there is a Revenue administrative practice in place that allows an employer to make payments up to €3.20 per day to such employees, subject to certain conditions, without deducting PAYE, PRSI, or USC. Revenue have confirmed that PAYE workers using their primary residence as a workplace during Covid-19 restrictions qualify as e-workers for the purposes of this practice.
This administrative practice has been in place for some time and the choice of whether to make the payment of €3.20 is at the discretion of the employer. The value of relief allowed under the Irish system is already considered sufficient to cover any legitimate additional costs incurred by workers. The level of support allowed also compares favourably internationally: at €3.20 per day, up to €16 per week or €832 per annum may be paid tax free. In contrast, in the UK, the weekly rate is just £6 per week or a maximum of £312 per annum.
Revenue also advise that the provision of equipment, such as computers, printers, scanners and office furniture by the employer to enable the employee work from home will not attract a Benefit-In-Kind charge, where the equipment is provided primarily for business use. The provision of a telephone line, broadband and such facilities for business use will also not give rise to a Benefit-in-Kind charge, where private use of the connection is incidental.
Where an employer does not pay €3.20 per day to an e-worker, employees retain their statutory right to claim a deduction under section 114 of the Taxes Consolidation Act (TCA) 1997 in respect of actual vouched expenses incurred wholly, exclusively and necessarily in the performance of the duties of their employment. PAYE employees are entitled to claim costs such as additional light and heat in respect of the number of days spent working from home, apportioned on the basis of business and private use.
As I announced on Budget day, in addition to these existing measures, Revenue have agreed to allow broadband to qualify for this relief. This apportionment is based on the number of days the person spent working from home in year with 30% of the apportioned value accepted by Revenue as related to work in the home.
PAYE workers can claim e-working expenses by completing an Income Tax return at year end. Revenue advise that the simplest way for taxpayers to claim their e-working expenses and any other tax credit entitlements is by logging into the myAccount facility on the Revenue website.
Revenue have published detailed guidance on e-working arrangements in their Tax and Duty manual TDM 05-02-13 e-Working and Tax which may be viewed at the following link:
https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-02-13.pdf
Finally, the 2020 Programme for Government: Our Shared Future contains several commitments related to working from home, including an examination of the “feasibility and merits of changing tax arrangements to encourage more people to work remotely”, the responsibility for which falls to my Department. There is also a commitment to the development of a ”national remote working strategy” and to that end, a Remote Working Strategy Inter-Departmental Group was established. Officials from my Department are included in this group which is chaired by the Department of Business, Enterprise and Innovation. I understand that the group's Report is due to be published shortly.
66. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which he remains satisfied that the steps taken to date to offset the impact of Brexit remains sufficiently robust to ensure Ireland’s economic future; and if he will make a statement on the matter. [2156/21]
View answerI am satisfied that the Government’s response to Brexit has been well-managed. We have invested significantly in new infrastructure, systems and staff. We have provided a range of supports to assist businesses and we have engaged intensively with stakeholders. My Department has been participating in whole of Government preparations for Brexit since before the UK referendum in 2016 and, in line with the Government’s overall approach, this work intensified during 2020 ahead of the end of the transition period.
Regarding financial services, my Department has been working closely with the Central Bank of Ireland and the National Treasury Management Agency (NTMA), through the Financial Stability Group, and through the Brexit Contact Group, to limit the impact of key identified risks in the Irish financial system and review progress on readiness planning. This work and engagement has sought to ensure that the sector is adequately prepared, and that financial services firms and market participants have contingency plans in place to cope with the possible effects of Brexit, with as little disruption for consumers, investors and markets as possible. On the basis of its work and engagement across the sector, the Central Bank has been able to assure me that the financial sector is well prepared and resilient enough to manage the changes associated with Brexit.
My Department has been supporting the Revenue Commissioners’ preparations for the customs checks that are now necessary for goods travelling between Ireland and the UK, excluding Northern Ireland. Notwithstanding that the EU-UK Trade and Cooperation Agreement is now in place, businesses face a significant level of change due to new customs arrangements. Significant resources have been allocated to this, including intensive stakeholder communications and training, staff recruitment and infrastructure enhancements. Revenue systems are working as expected and Revenue will continue to work closely with individual businesses and trade and business representative bodies to assist them in building their capability as quickly as possible, in order to minimise the impact. Any traders who are experiencing difficulties should seek support in resolving their issues. Advice and assistance is being provided by Government.
Much of my Department’s preparations are supported by measures contained in the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Act 2020. These measures deal with areas such as taxation, settlement finality, insurance and customs. The measures seek to protect citizens and consumers, facilitate the sound functioning of key sectors, and ensure our businesses are not disadvantaged after the end of the transition period.
The macroeconomic forecasts underpinning Budget 2021 assumed a disorderly end to the Brexit transition period would occur at end 2020. It was in this context that Budget 2021 provided €340 million in measures to prepare for Brexit, through the continuation of existing measures and new supports for sectors and enterprises likely to be most affected. This comes on top of over €700 million in successive Budgets since 2017. In addition, the Recovery Fund of €3.4 billion will allow specific, targeted measures to be introduced when and where the need arises in response to both Brexit and Covid-19.
The EU budget’s Brexit Adjustment Reserve allocation to Ireland will complement and enhance the comprehensive supports put in place by Budget 2021. The European Commission published the proposal on 25 December 2020, and my and other Government Departments are continuing to make Ireland’s case for substantial funding to support affected sectors known to EU partners.
On the basis that the EU-UK Trade and Cooperation Agreement is now in place, as well as the preparations undertaken in respect of the economy, budgetary strategy and financial services sector, I am satisfied with the steps taken to date to support preparedness and to manage any impact.
One sector in particular which has evolved as a result of Brexit, and which continues to do so, is the international financial services sector, which has seen firms relocating from the UK and firms looking to set up operations in the EU for the first time. The industry in Ireland has become broader and more diverse with more firms carrying out a greater range of regulated activities than at any time. This follows on from a number of government strategies, the latest iteration of which is ‘Ireland for Finance, that have sought to grow the sector over several decades, and these strategies were in place long before Brexit. The Government and various state agencies continue to work to fully capture any opportunities for inward investment that emerge through promoting Ireland’s strengths as a leading specialist financial services centre.
Notwithstanding these preparations and evolution within some sectors, given the scale and interconnectedness of Ireland’s trading relationship with the UK, Brexit will have a negative impact on our economy but the Government is doing everything possible to manage this.
Joint analyses by my Department and the Economic and Social Research Institute (ESRI) modelling the macroeconomic impact of Brexit were published in 2016 and 2019. The analyses covered a range of outcomes and possible future relationships between the EU and the UK.
The analyses included a limited Free Trade Agreement (FTA) based on zero tariffs and zero quotas on the goods side with very little covered in respect of services. Overall this is broadly in line with the recently concluded new Trade and Cooperation Agreement between the UK and EU.
Under this Free Trade Agreement scenario, the research found that the level of GDP would be around 2 per cent lower over the medium-term (i.e. 5 years) and around 3 per cent lower over the long-term (i.e. 10 years), compared to a situation where the UK remained in the EU.
In the context of the research outlined, Budget 2021 was based on the prudent assumption of a disorderly end to the transition period between the EU and the UK. Under this scenario, a decline in GDP of -2 ½ per cent was projected for 2021, with growth of 1 ¾ per cent expected in 2021. This is around three percentage points below a counterfactual scenario, where a trade deal between the EU and UK is reached. Updated economic forecasts will be published as part of the Stability Programmer Update in April, and this will take into account the EU-UK Trade and Cooperation Agreement which was reached.
67. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the financial services sector has been affected by Brexit negatively or positively; and if he will make a statement on the matter. [2157/21]
View answerMy Department has been participating in whole of Government preparations for Brexit since before the UK referendum in 2016 and, in line with the Government’s overall approach, this work intensified during 2020 ahead of the end of the transition period.
My Department has been working closely with the Central Bank of Ireland and the National Treasury Management Agency (NTMA), through the Financial Stability Group, and through the Brexit Contact Group, to limit the impact of key identified risks in the Irish financial system and review progress on readiness planning. This work and engagement has sought to ensure that the sector is adequately prepared, and that financial services firms and market participants have contingency plans in place to cope with the possible effects of Brexit, with as little disruption for consumers, investors and markets as possible.
On the basis of its work and engagement across the sector, the Central Bank has been able to assure me that the financial services sector is well prepared and resilient enough to manage the changes associated with Brexit. The Central Bank has received a very limited number of questions from financial services firms or consumers on issues arising as a result of Brexit.
On the prospects for the international financial services sector, the nature, scale and complexity of Ireland’s international financial services sector will change in a number of ways as a result of the financial services firms relocating from the UK as a result of Brexit and those looking to set up operations in the EU for the first time. The industry in Ireland has become broader and more diverse with more firms carrying out a greater range of regulated activities than at any time.
The full impact of Brexit for Ireland’s international financial services sector may not materialise for some years. At present, firms are establishing the foundations of a new or significantly expanded presence in Ireland, creating a platform for future growth opportunities in all sectors: insurance, banking, and investment management.
A number of government strategies have sought to grow the international financial services sector over the last number of decades, and these strategies were in place long before Brexit. The latest iteration of these strategies is ‘Ireland for Finance, the strategy for the development of Ireland’s international financial services sector to 2025’.
The Government and various state agencies continue to implement that Strategy, (and indeed industry lead on some appropriate action measures under the annual action plans) and are working to fully capture any opportunities for inward investment that emerge through promoting Ireland’s strengths as a leading financial services centre.
68. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains satisfied regarding Ireland’s economic performance notwithstanding the impact of Brexit and or Covid-19; and if he will make a statement on the matter. [2158/21]
View answerAs the interplay between the Covid-19 and Brexit shocks has implications for the economic outlook, my Department, along with the ESRI, conducted an analysis of the sectorial overlap between the two shocks. The analysis found that the sectors most exposed to both the Covid-19 and ‘disorderly’ Brexit shocks appear to be distinct and relatively unconnected. While the analysis was based on the assumption of a ‘disorderly’ Brexit, this general conclusion is still applicable today.
Although the Trade and Cooperation Agreement between the EU and the UK provides for zero-tariffs and zero-quotas for qualifying goods, it will nevertheless introduce trade frictions in the form of non-tariff barriers. It is also a considerable ‘step-down’ in terms of services trade relative to the previous EU-UK relationship, which is significant as Ireland exports considerably more services than goods to the UK. Therefore, while the newly formed agreement protects Irish firms from the more significant impact of a ‘disorderly’ Brexit scenario, they will still be impacted by the change in trading arrangements. Thus, it represents a smaller Brexit shock for a broadly similar sectorial mix of Irish firms as under a no-deal scenario.
Using this analysis, my Department’s Budget 2021 forecasts accounted for the dual impact of the Covid-19 pandemic and a ‘no-deal’ Brexit on the Irish economy. Crucially, it was assumed that a Covid-19 vaccine would not be widely available before 2022 and that bilateral trade with the UK would take place on WTO terms from January. Under these assumptions, GDP growth of around 1 ¾ per cent was projected for this year. However, the earlier than anticipated rollout of Covid-19 vaccines means there may now be some upside to the outlook, though the recent re-introduction of Level 5 restrictions will have an offsetting negative effect. The recent Trade and Cooperation Agreement between the EU and the UK also represents an upside risk to the economic outlook this year.
Overall, there remains considerable uncertainty surrounding the economic outlook as it will depend on many factors, including the speed at which Covid-19 vaccines can be rolled out, the time it takes to suppress the current wave of the virus, and the impact of the UK’s exit from the EU on the economy. My Department will continue to analyse economic and epidemiological developments, and will publish updated forecasts as part of the Stability Programme Update in the spring.
69. Deputy Bernard J. Durkan asked the Minister for Finance the particular issues that have arisen in recent times with specific impact on Ireland’s economy; the adequacy of the steps taken to respond; and if he will make a statement on the matter. [2159/21]
View answerAt the time of Budget 2021 in October, my Department forecast GDP growth of about 1 ¾ per cent for this year. These projections were based on the assumptions that a vaccine for Covid-19 would not be widely available before the end of this year and that bilateral trade between Ireland and the UK would take place on WTO terms from January.
However, the public health and economic situation has evolved significantly since the Budget forecasts were published. As it stands, there are both material upside and downside risks to the economic outlook for this year. On the upside, the recent Trade and Cooperation Agreement between the EU and the UK is positive for Irish exporters compared to the ‘no-deal’ scenario upon which the Budget forecasts were based, as it will provide for zero-tariffs and zero-quota trade for qualifying EU and UK goods. However, the Agreement also introduces ‘trade frictions’ in the form of non-tariff barriers, which will increase trade costs. Therefore, while the agreement protects Irish firms from the more significant impact of a ‘disorderly’ scenario, they will still be impacted by the change in trading arrangements. An earlier than anticipated rollout of vaccines will also improve the economic outlook for this year.
On the downside, however, the re-introduction of Level 5 restrictions at the beginning of this month will likely have a contractionary effect on the economy. Overall, there remains considerable uncertainty surrounding the economic outlook as it will depend on many factors, including the speed at which Covid-19 vaccines can be rolled out, the time it takes to suppress the current wave of the virus, and the impact of the UK’s exit from the EU on the economy.
The government has provided an enormous amount of fiscal support in response to the Covid-19 and Brexit crises. At just under €40 billion, the level of fiscal support made available in 2020 and 2021 has been unprecedented. Using counter-cyclical fiscal policy in this way has been the most appropriate course of action and was made possible only by the prudent management of the public finances in recent years. As the public health situation improves, we will have to move to a more sustainable fiscal trajectory. The Department will publish its medium-term macroeconomic and fiscal forecast with the Stability Programme Update in spring this year setting out the trajectory towards a more sustainable fiscal position.
70. Deputy Bernard J. Durkan asked the Minister for Finance if he remains satisfied that lending institutions remain sympathetic to difficulties faced by borrowers with particular reference to their ability to meet repayments in the current climate; and if he will make a statement on the matter. [2160/21]
View answerI appreciate the stress and uncertainty that many borrowers are facing, and that they will continue to need assistance and support from their lenders. It is the clear expectation of both the Central Bank and I that lenders engage effectively and sympathetically with distressed borrowers – in line with the Code of Conduct on Mortgage Arrears, the Consumer Protection Code and regulations for lenders lending to SMEs – to deliver appropriate and sustainable solutions and facilitate as many borrowers as possible to return to repaying their debt.
The Banking and Payments Federation of Ireland (BPFI) stated last week that its members are continuing to commit significant resources to support customers impacted by COVID-19, and in particular those who are affected by the latest restrictions. Through ongoing engagement with the BPFI and lenders, the Central Bank is working to ensure that borrowers affected by COVID-19 continue to be supported through this period of unprecedented stress.
The Central Bank recently wrote to all lenders indicating that lenders are to ensure that they have sufficient expert resources to assess individual borrower circumstances, and to offer appropriate and sustainable solutions to affected borrowers in a timely manner in line with regulatory requirements and Central Bank expectations.The Central Bank has also confirmed that there is no regulatory impediment to lenders offering payment breaks to borrowers at this time, providing they are appropriate for the individual borrower circumstance. With regard to primary dwelling mortgages, the Deputy may wish to note that it is open to lenders to put temporary arrangements in place to assist a borrower who are experiencing repayment difficulties pending the more detailed consideration and assessment of an individual mortgage case under the CCMA Mortgage Arrears Resolution Process.
Borrowers who are not satisfied with how a financial institution is dealing with their situation can make a complaint to the financial institution (or an appeal if you are not satisfied with a decision it makes under the CCMA process) and if they are still not satisfied with their response, they can contact the Financial Services and Pensions Ombudsman (FSPO). The FSPO can be contacted on 01 567 7000 or at info@fspo.ie and their website is attached: https://www.fspo.ie/.
I will continue to work with the Central Bank, as regulator, to ensure that the Central Bank consumer protection and other applicable frameworks will be fully available to all borrowers that will still need support.
