Covid 19 Financial Measures

The ongoing Covid – 19 pandemic has created a number of challenges for businesses, and they will remain in place for the foreseeable future. We have suggested below some of the priority planning and supports you should consider for the coming months.

Wage costs
A new wage subsidy scheme has been announced by the Government.  The draft Bill to implement this measure has been published and is due to be passed into law this Thursday (26th March 2020).

This scheme will be administered by Revenue.  This subsidy will provide the following subsidy/refund to employers:

  • A refund of up to 70% of the net pay of an employee earning up to a gross pay of €38,000 per annum.  This is a limit of €410 net pay per week.
  • A refund of €350 net pay of an employee earning gross pay of between €38,000 and €76,000 per annum.
  • No refund for an employee with gross pay of over €76,000 per annum

The employee also must have been on the payroll as at 29th February 2020.

No tax or PRSI is payable on this subsidy amount.  The employer can top up the payment subject to the restriction that an employee cannot receive more net pay under this scheme than they would normally have received before this scheme.  This top up amount will be taxed as normal.
The scheme is due to be operational from Friday 27th March subject to the Bill being passed on Thursday.

To qualify for the financial reliefs the employer must be in a position to demonstrate that the business has been adversely affected by Covid 19 and is unable to pay normal wages and outgoings.  This means a 25% reduction in either sales or sales orders between 14th March 2020 and 30th June 2020.  It is important to keep track of your sales and compare to same month in previous periods.  Revenue are due to publish additional guidance on this in the near future.

The refund will be processed by Revenue within 2 days of the submission of the payroll report.  Full guidance on how to report this through your payroll system is available on the Revenue website.

Details of all employers who avail of this scheme will be published on the Revenue website.

Cash flow
You need to plan ahead and be prepared for the potential cash flow issues which may arise.

While it is impossible to make an accurate prediction on what will happen over the coming months it is important to have a cash flow plan in place.  The budgeted figures should be updated each month for the actual figures to allow the business plan update for the changing circumstances.

Bank loan repayments deferral
The main banks (Bank of Ireland, Allied Irish Banks , permanent TSB, KBC Bank Ireland and RBS’s Ulster Bank) have agreed to a loan repayments deferral scheme.  This will allow businesses apply for a 3 month deferral of loan repayments.

Other credit servicing firms have announced they will also agree to loan repayment deferrals similar to the agreement with the main banks.

Banks are currently putting in place the system for applications to defer the loan repayments under this scheme.

Additional loan supports
In addition to the loan deferral scheme, there are also a number of supports to enable businesses access new loans.  The main schemes available are:

Tax liabilities
The Revenue Commissioners have announced that no interest will be charged on late payments of February or March PAYE/PRSI liabilities or January/February VAT liabilities.  This applies to SME’s only which is defined as a business with an annual turnover of less than €3 million.

Revenue will not engage in any debt recovery procedures during this period and will not rescind tax clearance status of businesses for failure to pay these liabilities.

Tax returns should still be submitted while this deferral is in place.

It is important to note that this is a deferral only and Revenue may request the full amount outstanding be paid once these emergency measures cease.

If a business is unsure if they have sufficient cash to pay the tax liabilities they may wish to transfer the liabilities to a separate bank account ready to pay Revenue.

The above guidance is based on the current information available and is subject to change as the situation continues to develop.

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