Brian Stanley (Laois-Offaly, Sinn Fein)
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180. To ask the Minister for Finance if the criteria for the working from home allowance will be reviewed given that those who availed of the help to buy scheme to purchase their home in 2020 are currently precluded from it. [41644/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Help to Buy (HTB) incentive scheme was introduced to assist first-time purchasers with a deposit needed to buy or build a new house or apartment. Subject to a maximum repayment amount, HTB takes the form of a repayment of income tax, including DIRT, paid for the four tax years prior to making an application.  A first-time buyer is given the option of selecting all or any of the previous four tax years prior to making an application for HTB.

Section 477C Taxes Consolidation Act 1997 outlines the definitions and conditions that apply to the scheme.  Revenue’s Tax and Duty manual Part 15-01-46 Help to Buy Scheme outlines further guidance and is available on its website at www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-46.pdf.

In August 2020, the Government introduced an enhancement to the HTB scheme as part of the July Stimulus plan, which was later extended in Finance Act 2020. In summary, where a first time purchaser enters into a contract for the purchase of a new home, or makes the first draw down of the mortgage in the case of a self-build, during the period 23 July 2020 and 31 December 2021, increased relief for the HTB scheme will be available to the lesser of:

(i)€30,000 (increased from €20,000),

(ii)10 per cent (increased from 5 per cent) of the purchase price of a new home or the

  completion value of the property in the case of self builds, or,

(iii)the amount of Income Tax and DIRT paid in the four complete tax years prior to making the

  application.

This is subject to the conditions of the scheme as outlined in the legislation being met.

As regards the working from home allowance, I am advised by Revenue that while working remotely does not entitle PAYE workers to a tax credit or an allowance, there is a Revenue administrative practice in place relating to e-Workers who incur certain expenditure in the performance of the duties of their employment from home.

E-Workers will incur certain expenditure in the performance of their duties from home, such as additional heating, electricity, and broadband costs. Revenue allows an employer to make compensatory payments of up to €3.20 per day to remote workers, subject to certain conditions, without deducting PAYE, PRSI, or USC.

Where an employer does not pay €3.20 per day to an e-Worker, or indeed where an employee incurs costs in excess of the €3.20 per day paid by the employer, the employees concerned retain their statutory right to claim a deduction under section 114 of the Taxes Consolidation Act 1997 in respect of actual vouched expenses they have incurred wholly, exclusively and necessarily in the performance of the duties of their employment. PAYE employees are entitled to claim any such additional costs in respect of the number of days spent working from home, apportioned on the basis of business and private use.

As regards the Deputy’s question, the position is that the HTB scheme is mutually exclusive from other claims for refunds of tax paid by an individual.  By way of example, where an individual paid tax of €25,000 in 2019 and claimed €20,000 in that year for HTB, some or all of the balance of tax of €5,000 remaining could be refunded to the person, if he/she had additional tax credits or reliefs to claim that year in respect of expenditure on items such as working from home expenses or health expenses.  Of course, if a person has had all their tax deducted for a year refunded to them under the HTB scheme, he/she would not be entitled to any further tax refunds for that year.

In the scenario mentioned by the Deputy, for an individual who availed of the HTB scheme to purchase his or her home in 2020, he or she is not precluded from claiming a deduction in respect of actual vouched expenses incurred in working from home in 2020 or 2021 (or for that matter, from an employer paying that individual €3.20 per day).  The HTB legislation prescribes that an individual must select a relevant tax year, which means a year of assessment within the four tax years immediately preceding the year in which the application was made.  Thus, for a house purchased in 2020, the relevant tax years are 2016, 2017, 2018 or 2019.

A PAYE worker who incurs relevant expenditure can claim e-Working expenses by completing an Income Tax return at year end. Revenue advises that the simplest way for taxpayers to claim their e-Working expenses and any other tax credit entitlements is by logging into the myAccount facility on the Revenue website. 

Revenue has published detailed guidance on this subject and on the question of how claims for e-Working expenses should be calculated and submitted in the Tax and Duty manual ‘e-Working and Tax’, which is available on the Revenue website at www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-02-13.pdf.

Finally, the national remote working strategy ‘Making Remote Work’, commits the Tax Strategy Group to reviewing the current tax arrangements for remote working in respect of both employees and employers.  The Tax Strategy Group will take account of the economic, financial and organisational implications arising from the experience of remote working during the pandemic and assess the merits of further enhancement for consideration in the context of Budget 2022.