Minister delays flat-rate expense changes until 2020

More than 80,000 employees will not now lose out on expense related tax relief until 2020, following a move from the Minister for Finance Paschal Donohoe to delay the abolition of a certain number or work related tax reliefs. The move means that shop assistants will still be able to claim relief of between €24.20 and €48.40 next year, and journalists relief of up to €152.40.

As revealed earlier this month, the Revenue is undertaking a significant review of the flat-rate expense scheme. This scheme has existed for many years and is designed to cover the cost of certain expenses employees incur in the course of their profession or trade, such as teachers getting equipment for a classroom, or a nurse laundering her uniform.

As part of this review, the Revenue signalled that from January 1st 2019, flat rate expenses, whereby employees are automatically entitled to tax relief provided that they sign up for them, would be abolished for a certain number of job titles. These are agricultural advisers (122 recipients in 2018); cardiac technicians (881); journalists (8,134); professional valuers in the valuation office (42); freelance actors in employment (682); and shop assistants (75,822). The reliefs on offer for these job titles range from €121 for a shop assistant, to €750 for an actor, with relief granted at the rate of tax paid by the employee. In the absence f the flat rate expense regime, employees would have to claim for any work related expenses themselves, providing receipts, under the Taxes Consolidation Act.

However, following political pressure amid fears that low paid workers would pay more tax if the reliefs were taken away, Mr Donohoe said on Tuesday that while the review will continue, changes have been delayed until 2020.

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“The Revenue Commissioners informed me that the matter will be reviewed next year and that there will not be any change to how they implement this policy until 1 January 2020,” he said.

Figures show that more than 500,000 PAYE employees availed of the reliefs to reduce their tax bill last year. As the relief is granted at your rate of income tax, higher paid earners receive a greater benefit from the relief, at 40 per cent of the relief on offer compared to 20 per cent for a lower income worker. For example, a shopkeeper on the standard rate of tax will benefit from 20 per cent of €121, or €24.20 a year/€0.46 a week, while a doctor on a higher rate will get 40 per cent of €695 or €278 a year/€5.35 a week.