The Programme for Government includes a commitment to facilitate and support remote working. The National Remote Work Strategy aims to make remote work a permanent feature of the Irish working experience in a way that maximises the economic, social and environmental benefits.
As part of the national remote working strategy: Making Remote Work, the Tax Strategy Group (TSG) reviewed the current tax arrangements for remote working in respect of both employees and employers. The TSG paper outlines the effects of Covid-19 on remote working in Ireland, provides an international comparison of remote working tax rules, sets out options for consideration with regard to enhancing the tax arrangements for both employers and employees in respect of remote work and evaluates those options in accordance with the Department of Finance Tax Expenditure Guidelines. The paper is published on the gov.ie website.
The feasibility of a bespoke tax credit for remote workers was considered as part of the review undertaken by the TSG, noting that stakeholders indicated a preference for a stand-alone remote working credit. However, for a number of reasons, including those outlined in the TSG paper, this option was not pursued. A tax credit for remote working would give rise to issues of deadweight loss and economic inefficiencies, as well as equity issues in the personal tax system. Further, it would be necessary to define qualifying criteria and potentially a minimum eligibility qualifying criteria to avail of the criteria that may necessitate distinctions be drawn between those that work from home on a full time basis and those that work from home on a part time basis. The cost of such a measure was another aspect that was considered.
Subsequently, as part of my Budget 2022 deliberations, I decided not to introduce a tax credit for remote working. Instead, I introduced an income tax deduction amounting to 30% of the cost of vouched expenses for heat, electricity and internet services in respect of those incurred while working from home can be claimed by taxpayers. This measure enhances and formalises existing arrangements that are currently operated by Revenue on an administrative basis and its legislative aspects were provided for in Finance Act 2021.
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.
Revenue’s online system will enable individuals claim tax relief in real time as they pay for these costs throughout the year. People are, generally speaking, well accustomed to supplying receipts to vouch expenditure in order to claim refunds of monies in other areas. For example, claiming refunds of medical expenses from health insurers are typically done on this basis. A similar model operates for tax refund claims in respect of remote working expenses and, I am advised that, Revenue has sought to make the submission of such claims as easy as possible for taxpayers.
PAYE workers can make a claim for remote working relief in one of two ways:
1. End of year claim - by completing an Income Tax return at year end
Where a taxpayer claims remote-working expenses by completing an Income Tax return at year end, he/she can upload supporting documentation via the Revenue Receipts Tracker. He/she can opt to save the information to Revenue storage where it will prefill his or her tax return to assist in the completion and filing of the return. Valid receipts saved to Revenue storage do not need to be retained by the taxpayer for 6 years.
2. Real-time claim - by using the My Account facility
Revenue advises 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 has provided a real-time facility available to claim remote working relief for 2022 when the expense is incurred. To avail of the credit in real-time the taxpayer is required to upload the receipt details and a readable image of his or her receipt(s) to the Receipts Tracker in MyAccount at the time of making the claim.
I am advised that Revenue has published detailed guidance on this matter on their website, with comprehensive information available in Tax and Duty Manual 05-02-13 e-Working and Tax, which is available at - www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-02-13.pdf.
Guidance on how to register for My Account is available at - www.revenue.ie/en/online-services/services/register-for-an-online-service/register-for-myaccount.aspx.