Thursday, 10 September 2020
Department of Finance
Covid-19 Pandemic Supports
The Stay and Spend scheme provides tax relief by means of a tax credit at the rate of 20% on qualifying expenditure of up to €625 per person, or €1,250 for a jointly assessed couple, in respect of 2020 and 2021. The tax credit is worth a maximum of €125, or €250 for a jointly assessed couple.
The scheme is a tax-based measure administered by Revenue and is one of a number of initiatives introduced by the Government as part of the July Stimulus Package with the aim of supporting employment.
It is the case that those on low incomes who have been removed from the tax system through Budgetary policy over the years, and therefore pay no income tax or USC, will not be in a position to benefit from this initiative.
Within the tax system, the normal position is that a tax credit can only benefit a person who has an income tax liability. In the present instance, however, special arrangements have being made to extend the potential benefit as widely as possible so that, even where a person does not have an income tax liability, he or she may still benefit by virtue of having a USC liability.
In terms of those on lower incomes, the position is that a full-time minimum wage worker will be able to absorb fully the Stay and Spend Tax Credit in either 2020 or 2021.
Indeed a person who earns 75% of the minimum wage in the year, for example a person working part-time for just over 29 hours per week on the minimum wage, will also be able to fully absorb the credit in either 2020 or 2021. In this case, the person will not have an income tax liability, but, by virtue of the fact that the tax credit may be set against a USC liability, the person will be able to fully benefit.
The credit will be off-set against the claimant’s income tax liability in the year of assessment, after other allowances, deductions or reliefs have been given to the claimant. If the credit available to a claimant is higher than their income tax liability in the year of assessment, any excess credit may be off-set against their liability to USC in that same year. This credit can be used to reduce a claimant’s liability to income tax and USC in the year of assessment to nil.