This blog was updated on 3rd April 2020 at 1:00 PM.
Coronavirus (Covid-19) will have a huge impact on businesses in Ireland and around the world. As a result, your business may be facing unprecedented challenges.
We are monitoring the situation very closely and will update this blog with new information every day. Information is provided by gov.ie, the Department of Business, Enterprise and Innovation (DBEI), Irish Revenue Commissioners (Revenue) and Citizens Information.
We’ll provide updates on the following areas:
- Payment supports for staff and employers. (This section was updated on 2nd April 2020 at 9:00 AM)
- Human Resources (HR) support
- Updates from Revenue
- Updates from the Companies Registration Office (CRO). (This section was updated on 2nd April 2020 at 9:00 AM)
- Other important updates for businesses in Ireland. (This section was updated on 3rd April 2020 at 1:00 PM)
- Tips for managing your cash flow
Payment supports for staff and employers
- Temporary Covid-19 Wage Subsidy Scheme. This is for businesses that are experiencing a significant decrease in trade but still have work for employees.
- Covid-19 Pandemic Unemployment Payment. This is for employees that have temporarily lost employment due to businesses closing. (This section was updated on 2nd April 2020 at 9:00 AM).
- Employer Covid-19 Refund Scheme. This has been replaced by Covid-19 Wage Subsidy Scheme.
- Short Time Work Support. This is for employees that have been placed on reduced working hours due to reduction in work available.
- Enhanced Illness Benefit. This is for employees who cannot work due to being medically certified to self-isolate or diagnosed with Covid-19.
Temporary Covid-19 Wage Subsidy Scheme
The Temporary Covid-19 Wage Subsidy Scheme replaces the previous Employer Covid-19 Refund Scheme.
This scheme is conducted through your normal payroll process and there is a new set of instructions on how to process payroll under this scheme available below.
- This new scheme will be available to employers from the 26th March 2020 for a period of 12 weeks.
- Revenue will refund employers up to a maximum of €410 each week for any qualifying employee. It’s important to note that employers shouldn’t pay employees more than their normal take-home pay.
- For employees on a monthly payroll, employers need to calculate the subsidy due based on the number of weeks. Employers will only receive the refund from Revenue once payroll is processed and all employees must remain on monthly payroll.
- The employer is expected to make their best efforts to maintain as close to 100% of normal income as possible for the subsidised period. This is referred to as “top-up payments”.
- In April 2020, the scheme will move to a subsidy payment based on 70% of the qualifying employees weekly average take-home pay to a maximum of €410. More information will be provided on this in due course.
Features of the Covid-19 Wage Subsidy Scheme:
- This special support payment is made through your normal payroll process.
- In general, employers will be reimbursed for amounts paid to employees within two working days after receipt of payroll submission.
- Income tax and USC will not be applied to the subsidy payment but will apply for any top-up payments
- Employees’ PRSI is not applied to the subsidy payment or the top-up payment.
- Employers’ PRSI will not be applied to the subsidy and reduced from 10.5% to 0.5% on any top-up payments.
- The names of all employers operating this scheme will be published on Revenue’s website.
- Be experiencing significant negative economic disruption due to Covid-19
- Be able to show Revenue that you have lost at least 25% turnover
- Be unable to pay normal wages in full
- Retain your employees on the payroll system
- Employees need to be on the employers’ payroll from 29 February and a payroll submission needs to have been made from 1 February to 15 March 2020.
- Employers must not operate this scheme for any employee who is making a claim for duplicate support (e.g. Pandemic Unemployment Payment) from the DEASP.
Changes to the payroll process under the Covid-19 Wage Subsidy Scheme
Employers run payroll as normal but the following details should be entered for any qualifying employee under the scheme:
- PRSI class should be set to J9
- A non-taxable amount equal to the employee’s net take-home pay or €410, whichever is lesser (i.e. you do not deduct income tax, USC or LPT, if applicable, or PRSI from the subsidy amount).
- If the employer is not making any payment to the employee, they should include a payment amount of €0.01 in the Gross Pay.
- If an employer is making additional wage payments, they should include this amount in Gross Pay.
- Employers do not include the Temporary Wage Subsidy payment in gross pay (i.e. €410).
- The payroll submission must include pay frequency and period number.
Employer Covid-19 Refund Scheme
This scheme has been replaced by Covid-19 Wage Subsidy Scheme (please see above).
Under this scheme, employers who have temporarily laid-off their staff could claim a special support payment of €203 per week if they pay their staff under the Covid-19 Refund Scheme. This payment is not subject to tax, USC or PRSI.
However, as of 25 March 2020, this scheme is replaced by the Covid-19 Wage Subsidy Scheme.
Any employers that are already registered with Revenue for the purposes of the Employer Covid-19 Refund Scheme are not required to take any further action.
Covid-19 Pandemic Unemployment Payment
Many employers have had to close their business and send their employees home. This is called temporary lay-off.
Those with no work are entitled to the new social welfare payment of €350 (from €203) for 6 weeks.
If you are already in receipt of the Covid-19 Pandemic Unemployment Payment you will receive the increased payment on your next payment date.
This is available to both employees (including students and company Directors) and self-employed people who have lost employment due to the Covid-19 pandemic.
You do not need a Public Services Card (PSC) to get the Covid-19 Pandemic Unemployment Payment. However, Citizens Information states that you will be requested to get one later.
Qualifications for the Pandemic Unemployment Payment
- Be between 18 and 66 years of age
- Have been in employment or self-employment immediately before the 13th of March 2020
- Have been laid off by their employer, as a consequence of the Covid-19 pandemic or their own business had to cease trading because of the pandemic
- Employees must be able to confirm that they are not in receipt of any employment income and are now fully unemployed
- Be resident in Ireland
How to apply:
1) Fill in a one-page application form
Detailed instructions on how to apply are available here: https://assets.gov.ie/71477/5df3b7f1f0fc454faefd8f906100ff99.pdf
2) Go to mywelfare.ie
- A basic Mygovid account ( e-mail address and password )
- Your personal details
- Your bank details (only Irish banks, Revolut and N26 accounts supported)
Can employees who voluntarily left employment apply for the Pandemic Unemployment Payment?
No. If employees left employment voluntarily, they are not entitled to claim the Covid-19 Pandemic Unemployment Payment.
Our advice here is that the employee applies for Jobseekers Allowance.
Short Time Work Support
Employees that have working hours reduced to 3 days or less per week should apply for Short Time Work Support from Social Welfare.
Employees need to have previously been working on a full-time basis in order to qualify.
This payment support is available for the day’s employees are no longer working. For example, if your employee is usually on a 5-day work pattern but reduced to a 3-day work pattern, they are entitled to claim support for the other 2-days.
Qualifications for Short Time Work Support
- Be under 66 years of age
- Temporarily working a standard reduced weekly work pattern
- Working 3 days or less per week having previously worked full-time
- Be capable of work and be available for full-time work
- Have enough paid or credited social insurance (PRSI) contributions at class A, H, S or P
- You must have paid at least 104 PRSI insurable employment contributions at Class A, H or P
- You must have paid at least 156 PRSI self-employment contributions at Class S.
- You can request a contribution statement through mywelfare.ie (please note you need to have a MyGovID account).
How to apply:
1) Employees need to complete form UP1
Employees need to complete the application form for Jobseeker’s Allowance or Jobseeker’s Benefit (UP1). If you have a Public Services Card, you can apply for this payment online through mywelfare.ie.
2) Employers need to complete for UP14
Employers need to complete an Employer Declaration for Short-time Work Support (UP14). This needs to accompany the employees UP1 form.
You can download the forms here.
Enhanced Illness Benefit
- The current 6-day waiting period for Illness Benefit will not apply to anyone who has Covid-19 or is in medically required self-isolation.
- The rate of Illness Benefit will increase from €203 to €350 per week for up to 2 weeks if you are medically required to self-isolate.
- The Enhanced Illness Benefit is available for 12 weeks if you’re medically diagnosed with Covid-19 and therefore unable to work.
- The new enhanced Illness Benefit rate will be effective from 9 March 2020 and workers will be entitled to a refund of any arrears due from this date when the legislation is in place.
- The normal social insurance requirements for Illness Benefit will be waived or the means test for Supplementary Welfare Allowance will be removed, if you are medically required to self-isolate or diagnosed with Covid-19.
Human Resources (HR) support
When to implement short time working
This is when there is still some work for employees but because of the current pandemic, there is a reduced workload. It involves changing employees hours of work on a temporary basis to work fewer hours.
If your employee is contracted for a certain number of hours, for example, 30 hours, you cannot change that agreement. Martina McAuley, Director of HR Team states however, if your organisation is faced with difficulties, such as a reduced workload due to Covid-19, employers are entitled to implement Short Time Working.
Under short time working, you need to notify your employee that you will continue to hold their job but their hours of work will be changed on a temporary basis.
When to temporary lay-off your staff
Employers can temporarily lay-off staff without payment from the organisation if there is no work for employees. McAuley explains that in order to instigate temporary lay-off, employees need to get a letter explaining how long this temporary lay-off will last. If you’re unsure how long it will last, McAuley recommends that employers set a date to review the situation, for example, in 2 or 3 weeks time, and keeping regular contact with your employees.
Employers are allowed to use a combination of short time working, then temporary lay-off and then short time working again as we start to come out of the Covid-19 situation.
When to implement redundancy
This is for work that you know will not come back as a result of the pandemic. McAuley advises any employers considering redundancy for their employees to wait and use temporary lay-off first. Temporary lay-off does not cost the employer anything so it’s a good idea to start there and revisit redundancy at a later stage if required.
How long can an employer use these measures?
McAuley says that case law suggests 8-10 weeks as a reasonable amount of time for short time working or temporary lay-off. However, in these unprecedented events, short time working or temporary lay-off may be required for as long as we are required to socially distance ourselves and self-isolate.
What if your employee doesn't want to work due to Covid-19 concerns?
Employers should communicate clearly and openly with their staff around any changes to the business as a result of Covid-19 concerns. If an employee has underlying health conditions, the employer needs to take adequate measures to ensure their safety.
For example, if your organisation can facilitate working from home, employees should be allowed to do so.
If your employee has not been to an affected area, they have not come in direct contact with anyone with Covid-19 or has not been medically certified to self-isolate or diagnosed with Covid-19 but want to self-isolate over their individual concerns, they can do so. However, it must be clear that this doesn’t come with any type of payment.
They could be offered to take annual leave or take unpaid leave.
Updates from Revenue
Revenue have outlined some key advice and actions taken to assist small and medium businesses experiencing cash flow and trading difficulties due to the impacts of the virus.
It is important to remember that Revenue has a long history of working very successfully with taxpayers to resolve any tax payments difficulties they may experience.
Information for SMEs
- Tax returns: businesses experiencing temporary cash flow difficulties should continue to submit tax returns on time.
- Application of interest: the application of interest on late payments is suspended for January/February VAT and both February and March PAYE (employers) liabilities.
- Debt enforcement: All debt enforcement activity is suspended until further notice.
- Tax Clearance: current Tax Clearance status will remain in place for all businesses over the coming months. (A Tax Clearance Certificate is confirmation from Revenue that an applicant’s tax affairs are in order.)
Information for subcontractors
- Relevant Contract Tax (RCT): the RCT rate review scheduled to take place in March 2020 is suspended. This process assesses the current compliance position of each subcontractor in the eRCT system and determines their correct RCT deduction rate, i.e. 0%, 20% or 35%. As this process may result in a subcontractor’s RCT rate increasing due to changes in their compliance position, the review is suspended.
- The RCT rate reviews can be self-managed in ROS. Subcontractors can check if their rate should be lower and can then ‘self-review’ to get that lower deduction rate.
Information on importing goods
- Customs: critical pharmaceutical products and medicines will be given a Customs ‘green routing’ to facilitate uninterrupted importation and supply.
- Revenue will continue to closely monitor the evolving situation regarding Covid-19 and will issue further updated guidance for businesses when required and particularly in good time before the March/April VAT returns, and other future returns are due.
Local Property Tax (LPT)
- Revenue has announced it is deferring the collection of Local Property Tax for those who pay by Annual Debit Instruction or Single Debit Authority payment.
- These payments were due by 21 March 2020, however, Revenue has advised the deduction date will now change to 21 May 2020.
- Property owners do not need to advise Revenue or take any action. The payment date will be changed automatically to 21 May 2020. The move is designed to ease cash flow pressure on property owners amid the coronavirus outbreak.
All Revenue phone lines are closed with the exception of the following:
- National Employer Helpline – +353 01 938 3638
- Temporary Covid-19 Wage Subsidy Scheme and ROS Technical Helpdesk – +353 01 738 3699
- Other enquiries and correspondence can be sent through MyEnquiries on ROS.
Repayments and refunds
Revenue are still working to approve and process repayments and refunds, especially VAT repayments and Professional Services Withholding Tax (PSWT).
Updates from the Companies Registration Office (CRO)
On the 20th March 2020, the CRO announced that all Annual Returns due to be filed between now and 30th June will be deemed to be filed on time if all elements of the annual return are completed and filed by 30th June.
This means that companies need to file their Annual Return as normal but you have until the 30th June to ensure all the steps are completed.
Companies still need to file their Annual Return on time, i.e. on the 28th day after your Annual Return Deadline (ARD).
Steps to filing your Annual Return under this new deadline
- Complete the form B1 on or before 28 days after your ARD
- Upload your financial statements by 30th June
- Deliver the signature page as normal to the CRO before 30th June
The situation will be reviewed and the date 30th of June may be extended depending on how the situation develops.
We discussed with the CRO and they recommend that if your financial statements are ready that you upload them straight away. They expect their website to crash due to large volumes of activity in June.
The CRO are offering limited services only.
On the 1st of April, the CRO announced that their public office will remain closed but they will offer limited services, including company incorporations and receipt of charges.
This means that all post received will be date stamped on receipt but only processed with the public office reopens.
Other important updates for businesses in Ireland
Commercial rates deferral
On the 20th March, the Irish Government agreed with local authorities that they should defer rates payments from the most immediately impacted businesses – retail, hospitality, leisure and childcare sectors, for three months, until end-May.
This measure will be implemented by each local authority in your area.
Social Welfare payments will be made every two weeks
Starting on the week of 23 March 2020, some Social Welfare payments will be paid on a double (two-week) basis. This means that instead of getting the payment weekly, you will be paid every two weeks.
This applies to people who collect their payments at post offices and people who are paid into a bank account.
Temporary arrangement for PPSN and PSC applications
- PPSN: Personal Public Service Number
- PSC: Public Services Card
The Department of Employment Affairs and Social Protection has temporarily postponed the current PPSN and PSC allocation process.
However, as you may need a PPSN in order to avail of services, you can apply directly by email.
All details about how to apply are available on the government website.
Claiming working from home expenses
Remote workers are eligible to claim back €3.20 (2020) per day that is worked remotely. Revenue recognises that working from home will incur certain household expenditures, such as light and heating. Employers can pay this payment to staff on top of normal business expenses or employees can claim it back at the end of the year when filing their tax return. Check out our guide on Claiming Home Office Expenses As A Business Owner/Director.
Tips for managing your cash flow
Negotiate with suppliers
Identify which suppliers need to be paid and when they need to be paid by. Communicate clearly with your suppliers about your situation and see if they will agree to longer payment terms. Most businesses will be in the same boat as you and therefore will be understanding.
Discuss credit terms with bank
Discuss with your bank early on, before you run into any cash flow difficulties. By engaging early you can identify what support your bank can give you. They may offer you payment breaks or different loan options.
Cash flow projections
Prepare a new cash flow forecast for the next few months. What costs can you cut and how can you save money? Although Revenue isn't applying interest on late payments, businesses will still need to pay any tax due when this crisis is over.
Update your strategy
Think about how you ran your business before this crisis. What can you update or automate to suit the current economic climate? This might be a good time for your business to pivot and offer a new product/service, set up an online store or expand your target market. For example, working from home might be a system you implement as an ongoing policy.
How can we support businesses in Ireland?
We’re hosting weekly live webinars to help small businesses in Ireland overcome the challenges they are facing due to Covid-19. We will be announcing the date in the next couple of days but you can subscribe to our Startup Newsletter to stay up to date on our webinars and business updates.
Our accountants will discuss topics like cash flow management and financial supports available so we can give you practical information to use in your business.
You can also contact our Client Services Team if you are interested in learning more about our accountancy services in Ireland.