Overview
The July stimulus package – Job Stimulus 2020 – was announced today 23 July with a more extensive national economic plan to follow in October that will accompany Budget 2021. The Government has committed to a spending package approaching €7 billion including 50 new measures to boost Ireland’s economic recovery. The focus is on saving businesses and jobs. Measures include expenditure for grants, income support, tax rebates, VAT reduction of 2%, spend on upskilling and training, and the Covid-19 credit guarantee scheme, a spend of €2 billion and the largest guarantee scheme for businesses in the history of the State.
Remember, we are here to help. If you need advice or assistance with regard to how any of these measures may help you and your business, call Jamie O’Hanlon at 0818 303 087 or email info@avidpartners.ie.
Summary of Measures
Income Supports
Temporary Wage Subsidy Scheme
The Temporary Wage Subsidy Scheme (TWSS) will be replaced by the Employment Wage Subsidy Scheme (EWSS) from 1 September until 31 March 2021. To be used as a payroll subsidy support rather than an income replacement measure. Criteria broadened to include newly hired employees and seasonal workers hired during July and August. To qualify an employer must be operating on no more than 70% of turnover this year compared to last year. The employer will receive a flat-rate subsidy of €203 per employee.
Pandemic Payment Scheme
Scheme had been due to expire on 10 August 2020. Scheme now extended until April 2021, with payments being progressively cut over the period based on the pre-pandemic income of the applicant. The scheme closes to new applicants from 17 September 2020.
There will be three rates of payments as follows:
- Top rate of €300 for those who earned >€300 per week pre-Covid19. Will Fall to €250 per week in February 2021;
- €250 per week for those who earned between €200 and €300. Will fall to €203 per week in February 2021;
- €203 per week for those who earned < €200 per week.
In April 2021, PUP claimants will apply for the standard Job Seekers Allowance.
The national unemployment rate is currently at 22%. The Pandemic Unemployment Payment is currently underpinning around 345,000 jobs, down from a peak of around 600,000, while the Temporary Wage Subsidy Scheme is underpinning around 400,000 jobs in 68,000 companies.
Employment Stimulus Package
The €100m employment stimulus package will see 10,000 funded work experience places and recruitment subsidies of €7,500 to €10,000 to hire up to 8,000 people. A major retraining and upskilling programme aimed at helping those who have lost their jobs due to Covid-19 is also contained in the plan.
- The Department of Higher Education will be allocating a further €100m to deliver 35,000 additional places.
- Employers will receive an incentive of €3,000 to take on apprentices.
- Grants to take up short duration skills training will double from €500 to €1,000, with 12,500 expected to take advantage of this.
- There will also be a grant for the self-employed who do not qualify for business restart grants, and some increases in community employment schemes.
Business Funding
SME Loans
A package of liquidity and enterprise investment measures worth €55million will be put in place to support small and micro companies through additional resources for Micro Finance Ireland and the Local Enterprise Offices.
This will include measures to reduce interest rates on lending for micro and small businesses, including grants equivalent to 0% interest on the first year of SBCI and MFI loans.
The Future Growth Loan Scheme is being expanded from €200 to €500 m with the European Investment Bank Group, so businesses with up to 499 employees can invest for the longer-term at competitive rates.
Covid-19 Credit Guarantee Scheme (CGS)
The CGS is a scheme where the Government will guarantee up to €2 billion of loans granted by Irish banks to SMEs. It is aimed primarily at businesses that would otherwise not be able to obtain funding as they are higher risk businesses due to COVID-19. The CGS is a re-purposing of the current SME Credit Guarantee Scheme that was first introduced in 2012. Loans of €10,000 up to €1 million are to be made available by participating Irish banks – AIB, Bank of Ireland and Ulster Bank – for terms between three months and six years. Risk will be shared between the Government and the banks with the Government guaranteeing the banks against 80% of losses on each loan.
Restart Grant
The Restart Grant has been expanded by €300m. Grants will be increased from a maximum of €4,000 to €25,000 and criteria broadened to include bigger businesses with up to 250 employees or a turnover of €25m and to others who did not qualify as they did not pay rates. This includes bed and breakfasts and ‘man with van’ type operations such as carpenters, electricians, and plumbers.
Commercial Rates Waver
Current waiver will be extended to September 2020 and will include businesses that are currently trading and those that have remained closed. Firms will still be liable to pay the rates due for the period at a future date. Large multi-nationals are excluded.
Cashflow/Liquidity
A package of measures to boost cash flow for businesses, and the self-employed, including reforms to how trading losses can be carried against the previous year and tax warehousing.
- To provide immediate cash-flow support to previously profitable companies, the early carry-back of trading losses will be allowed, leading to an immediate refund of some or all of corporation tax paid.
- The Government confirmed the previously announced warehousing of tax liabilities. This will allow for businesses affected by Covid-19 to delay payment of their PAYE and VAT debts in part of in full for a set period with no interest or penalties.
- In order to provide support to taxpayers experiencing difficulty with tax liabilities, the interest rate applying to agreed repayments of all tax debt (where agreement has been reached prior to 30 September 2020) will be reduced to 3%.
- There will be a new income tax relief for self-employed individuals who were profitable in 2019 but, as a result of the Covid-19 pandemic, incur losses in 2020.
Online Trading Support
Businesses will be supported to develop their online presence through a further funding call of the Online Retail Scheme of €5.5 m through Enterprise Ireland and an expansion of the Online Trading Voucher Scheme from the Local Enterprise Offices of €20m.
Sustaining Enterprise Fund
The expansion of the Enterprise Ireland €180m Sustaining Enterprise Fund scheme to include direct grant support to viable businesses,in addition to equity and repayable advances.
Industry Supports
Housing
First-time home buyers will receive assistance to stimulate demand. The current limit of 5% or €20,000 to qualify is being increased to 10% or €30,000. This measure has been costed at between €18m and €20m.
Construction
€100m investment in the National Energy Efficiency Retrofit Programme for energy efficient housing.
Tourism
A Stay and Spend tax rebate worth up to €125 per person to assist the tourism and hospitality sector in the off-season based on a spend of €625. This will be recouped as a tax credit in 2021. Eligible facilities must be registered with Bord Fáilte. A €10m Restart Fund for the Tourism sector along with a €10m Pilot Performance Support Scheme for the culture sector to assist planning for events in the context of Covid-19.
VAT
VAT rate cut from 23% to 21% for the next 6 months. Effective from September 1st.
Capital Expenditure
The Government is committing to increasing capital expenditure to €9.1 Billion in 2021, up 12% on 2020.
Measures to ‘Future Proof ‘Businesses and Support Innovation
- €25 million Investment in Life Sciences
- Training and Skills Development
- €10 million to be provided under a New Green Enterprise Fund
- Increase in Seed and Venture Capital for innovation driving enterprises
- Supports for IDA promotional and marketing initiatives targeting jobs
- Additional supports to businesses to develop their online presence.
- €20 million Brexit fund to help SMEs to prepare for new customs arrangements
- Roll out of National broadband plan to optimise the opportunity presented by remote working.
Further Reading
Further detail is provided in the plan accessed via the link below.
Jobs Stimulus 2020 pdf 23/07/2020
Remember, we are here to help. If you need advice or assistance with regard to how any of these measures may help you and your business, call Jamie O’Hanlon at 0818 303 087 or email info@avidpartners.ie.
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