New Wage Subsidy Scheme explained by Experts but some more details required

by TAB4ie | Mar 25, 2020

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HR Duo who have recently announced free HR software for a year. But they are also the experts in the complete outsourced HR solution. They have kindly supplied this updated information on the new Wage Subsidy Scheme.

The new Revenue Commissioners’ Temporary Wage Subsidy Scheme will run for 12 weeks from 26 March 2020.

The scheme is available for employers

Who retain staff on the payroll;
Some of the staff may be temporarily not working or some may be on reduced hours and/or reduced pay.

It will allow you to retain employees on your books by making best efforts to maintain a significant, or 100% income for the employee, for the period of the scheme.

Qualification

Employers must:

Be able to demonstrate, to the satisfaction of Revenue, a minimum of a 25% decline in turnover

Be unable to pay normal wages and normal outgoings fully (How is this defined?)
Retain their employees on the payroll.

The Scheme is confined to employees for whom a payroll submission has already been made to Revenue in the period from 1 February 2020 to 15 March 2020.

Key Features

- For March Revenue will refund employers the lesser of the normal take-home pay OR €410 per employee per week subject to point 2 below. EVERYONE GETS €410 FOR MARCH!
- In April, the scheme will move to a subsidy payment based on 70% of the weekly average take-home pay for each employee up to a maximum of €410*.

Employers should pay no more than the normal take-home pay of the employee.

The subsidy scheme applies both to employers who top up employees’ wages (subject to the previous point) and those that aren’t in a position to do so.
Payments are to be made through the normal payroll (see below).
The reimbursement will be made within two working days after Revenue receives the payroll submission.

* (details on this will be made available by Revenue in due course).

Notes

Income tax and USC are not applied to the subsidy payment.
Employee PRSI is not applied to the subsidy or any top-up payment by the employer.
Employers’ PRSI is not applied to the subsidy and will be reduced from 10.5% to 0.5% on the top-up payment.
Employees that are still on the payroll do not need to take any action – all payments will be made via normal payroll.

Registering for the Temporary Wage Subsidy Scheme

Employers, or their agents, wishing to register for the scheme can apply to Revenue by carrying out the following steps

Log on to ROS myEnquiries and select the category ‘COVID-19: Temporary Wage Subsidy’.
Read the “Covid-19: Temporary Wage Subsidy Self-Declaration” and press the ‘Submit’ button.
Ensure bank account details on Revenue record are correct. These can be checked in ROS and in ‘Manage bank accounts’, ‘Manage EFT’, enter your preferred refund bank account.

Any employer, already registered with Revenue for the purposes of the Employer COVID-19 Refund Scheme, is not required to take any further action.

Any employer may make payroll submissions from 26 March 2020 under the subsidy scheme arrangements on the same basis as they were doing for the Employer Refund Scheme, and €410 will be refunded in respect of each eligible employee per week.

Operating the scheme from Thursday 26 March 2020

The employer runs the payroll as normal, entering the following details for each relevant employee under the Scheme:

PRSI Class set to J9.
A non-taxable amount equal to the employee’s net take-home pay or €410 whichever is the lesser.
If an employer is not making any payment to the employee, they should include a payment amount of €0.01 in Gross Pay.
If an employer is making additional wage payments to affected employees, they should include this amount in the Gross Pay.
It is important that employers do not include the Temporary Wage Subsidy payment in Gross Pay.
The payroll submission must include pay frequency and period number.

Income tax, USC, LPT, if applicable, and PRSI are not deducted from the Temporary Wage Subsidy.

Employee Tax

In many cases, the payment of the Temporary Wage Subsidy and any additional income paid by the employer will result in the refund of Income Tax or USC already paid by the employee.
Any Income Tax and USC refunds that arise as a result of the application of tax credits and rate bands can be repaid by the employer and Revenue will also refund this amount to the employer.
Employers must not operate this scheme for any employee who is making a claim for duplicate support (e.g. Pandemic Unemployment Payment) from the DEASP.

Based on the information provided in payroll submissions and adherence to the maximum limits, described above, Revenue will credit employers with the temporary wage subsidy paid to each employee.

Penalties will apply to any abuse of the Subsidy Scheme by self-declaring incorrectly, not providing funds to employees or non-adherence to Revenue, and any other relevant, guidelines.

We did not address this earlier as we were hoping that there would be some Revenue guidance today. Our feedback from Revenue is that the guidance for the treatment of salaries over €38,000 is still being drafted. While it is being drafted they have no advice to give us.

The only information we currently have from Gov.ie is as follows.

An eligible employer will be supported up to 70% of an employee’s take-home income up to a maximum weekly tax-free payment of €410 (that is, 70% of take home weekly income of €38,000 per annum).

The scheme will provide support on incomes up to €76,000 or twice average earnings. It will be capped at net €350 for incomes between €38,000 and €76,000.

The employer is expected to make best efforts to maintain as close to 100% of normal income as possible for the subsidised period.

We will await guidance from Revenue and let you know as soon as there is an update.

Regards,

LATEST GUIDANCE

guidance-on-operation-of-temporary-covid-wage-subsidy-scheme