Dáil Éireann Debate, Thursday - 10 February 2022
245. Deputy Neale Richmond asked the Minister for Finance if he will consider increasing the €3.20 per day work from home allowance given the rise in the cost of electricity and utility bills; and if he will make a statement on the matter. [7204/22]
View answer246. Deputy Neale Richmond asked the Minister for Finance if he will consider increasing the 30% remote working relief on the cost of electricity bills given the rise in the cost of electricity and utility bills; and if he will make a statement on the matter. [7205/22]
View answerI propose to take Questions Nos. 245 and 246 together.
As the Deputy will be aware, there are a number of administrative and legislative provisions under which employers can support employees in working from home.
Where 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. There is no legal obligation on the employer to make such payment and the payment is at the discretion of the employer.
I am advised by Revenue 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. These Benefit-in-Kind exemptions are provided for by way of legislation, in section 118 of the Taxes Consolidation Act (TCA) 1997.
In relation to the Deputy’s suggestion to increase the daily €3.20 allowance, it should be noted that the administration of the tax code is exclusively a matter for Revenue. Section 101 of the Ministers and Secretaries (Amendment) Act 2011 has specifically provided that Revenue is independent in the performance of its functions under, or for the purposes of, tax laws. Consequently, I am precluded from giving any direction or instruction to Revenue in regard to the review of any threshold relating to e-working.
I am further advised by Revenue that the value of relief allowed under the administrative arrangements 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. However, while Revenue has confirmed that there are currently no plans to increase the €3.20 allowance, it will keep the matter under review.
As the Deputy will be aware, in the Finance Act 2021, I enhanced and formalised the tax arrangements for working from home in line with Government policy to facilitate and support remote working. Accordingly, for the tax year 2022, an income tax deduction amounting to 30% of the cost of vouched expenses for electricity, heat and broadband in respect of those days spent working from home can be claimed by taxpayers.
The amount of the relief will depend on the particular circumstances of the remote worker in terms of the level of costs incurred and their marginal tax rate. However, this measure will provide some relief for those with additional expenses arising from working from home and it will support living standards as the economy recovers.
In addition, Budget 2022 included a significant tax package amounting to a cost of €520 million. This included a substantial income tax package comprising of an increase of €50 in each of the main tax credits – personal tax credit, employee tax credit and the earned income credit – from €1,650 to €1,700. An increase of €1,500 in the income tax standard rate band for all income earners was also introduced. Furthermore, the 2% rate band ceiling for USC was also increased for 2022 in line with the increase in the national minimum wage to ensure that a full-time adult worker who benefits from the increase in the hourly minimum wage rate of €10.20 to €10.50 will remain outside the top rates of USC. It is important to point out that these measures introduced in the Budget 2022 will benefit everyone who pays income tax and are aimed at helping people at a time when prices are rising.
While I have no immediate plans to increase the tax relief for working from home, I would point out that the Electricity Costs (Domestic Electricity Accounts) Emergency Measures Bill 2022 is currently making its way through the Houses of the Oireachtas, this measure will provide a once-off support to all payers of domestic electricity bills to help to off-set rising prices. This is a measure that will benefit all households regardless of whether they have an income tax liability or not.
