Éamon Ó Cuív (Galway West, Fianna Fail)
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324.To ask the Minister for Finance the number of tax payers who are in employment that claim the flat rate expenses tax credit; the number estimated to be entitled to it; whether in Budget 2025 it is intended to simplify the number of rates of this tax credit and announce a publicity campaign to ensure the maximum number of eligible people claim it; and if he will make a statement on the matter. [31706/24]

Jack Chambers (Dublin West, Fianna Fail)
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Section 114 of the Taxes Consolidation Act 1997 (TCA) provides for a tax deduction in respect of expenses incurred wholly, exclusively and necessarily by an individual in the performance of the duties of his or her employment.

Flat rate expenses (FRE) is not a tax credit, it is a regime is operated by Revenue on an administrative basis where both a specific commonality of expenditure exists across an employment category and the statutory requirement for the tax deduction as set out in section 114 TCA 1997 is satisfied, namely, that the expenses are wholly, exclusively and necessarily incurred in the performance of the duties of the office or employment by the employee concerned and that such expenses are not reimbursed by his or her employer.

The FRE regime was established to apply a uniformity of approach to tax deductibility for expenses of large groups of employees and to facilitate ease of administration for both Revenue and employees. The expense should apply to all employees in that category and not be discretionary.

I am advised that Revenue that the FRE regime developed incrementally over the last 40 to 50 years and was established at a time when the numbers of employees/PAYE taxpayers filing an Income Tax Return was relatively low. This is in contrast to the position today, whereby significant numbers of PAYE taxpayers routinely file an Income Tax Return to claim the range of tax reliefs and credits available to them, for example, medical expenses, the rent tax credit and remote working relief. In respect of the 2022 tax year, to date over one million Income Tax Returns have been filed with Revenue by PAYE taxpayers. This is in comparison to a figure of under 300,000 in respect of the 2018 tax year.

Where an FRE is not in place for an employment category, an employee retains his or her statutory right to claim a deduction under section 114 TCA 1997 in respect of an expense incurred wholly, exclusively and necessarily in the performance of the duties of their employment, to the extent to which the expenses are not reimbursed by the employer.

The quickest and easiest way to claim tax relief for qualifying employment expenses is to complete an online Income Tax Return. For PAYE taxpayers, this return can be found in the PAYE Services tab in myAccount on the Revenue website.

The number of taxpayers with a PAYE employment on record that availed of an FRE in 2023 was 876,462. This figure is based on data currently available and is subject to change should additional claims for an FRE be made in respect of the 2023 tax year. Regarding the number of taxpayers estimated to be entitled to an FRE, it is not possible for Revenue to estimate this as a taxpayer must make a claim in order to avail of the FRE regime.

As noted above, the FRE regime is operated by Revenue on an administrative basis - an amount, that represents the common qualifying expenditure that is incurred across an employment category, is decided upon following detailed engagement between Revenue and the relevant representative body for the particular group of employees. I am advised by Revenue that there are no current plans to change the rates or the categories. Additionally, as noted above, a taxpayer retains their statutory right to claim a deduction for expenses incurred in employment where the conditions of section 114 TCA 1997 are met.

In January, Revenue, in conjunction with the Minister for Finance, launched a public information campaign to raise awareness among PAYE taxpayers about the range of tax credits and reliefs available, and how they can claim those credits and reliefs. The press release in relation to the Revenue information campaign for PAYE taxpayers is available on the Revenue website at www.revenue.ie/en/corporate/press-office/press-releases/2024/pr-012324-information-campaign.aspx

Further guidance on the general rule of deduction of expenses in employment is available on Revenue’s website at www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-02-20.pdf