The Department of Finance considered creating a new "bespoke" tax credit for home workers but flagged concerns the main beneficiaries would mainly be men, aged over 30, in full-time employment, and already on higher salaries.
Officials also explored the possibility of a one-off tax credit of either €25 or €50 for every worker as well as a revamped “home renovation incentive” for refurbishing a room as an office.
The range of options were prepared for Minister for Finance Paschal Donohoe ahead of Budget 2021 to help the hundreds of thousands of people forced to work from home throughout 2020.
A once-off increase in tax credits of between €25 and €50, giving a benefit to every worker in the State who earned more than €16,500 was considered the most equitable solution, according to internal department records.
Officials said there might be concerns raised over “narrowing” the tax base but that it would only apply for a single year and would cost between €41 million and €82 million in lost tax.
“It could therefore recognise the unique and varied work environment that all citizens have endured in 2020 – something for nearly every worker,” a submission stated. It would also help out those on pandemic payments and help to “further minimise” the tax hit many faced at the end of last year.
New tax credit
Also put forward was development of a new tax credit for remote workers but it came with a warning that it would be difficult to implement quickly. It also raised “legitimate equity issues” over who would actually benefit from it, officials said.
"The ESRI have highlighted that, in 2020, males, Irish nationals, workers aged over 30, full-time employees and those in higher-paid occupations have a higher probability of working from home, " said the submission.
It note that CSO data had identified that sectors hardest hit by Covid-19 were those in which workers are unable to remotely work, such as accommodation, food, and retail.
Another option was a revamp of the existing home renovation incentive, which lets people claim back some of the cost of house improvements. The submission said it was likely there would be a sharp rise in such claims in 2020 as people converted rooms into work offices.
However, the minister was told that general awareness of the scheme remained low.
In an email, the minister expressed support for the plan, writing: “Let’s go with [this] concept. Builds on what is already available.”
A Department of Finance spokesman said Minister Donohoe had used his budget speech to highlight a number of updates on what tax reliefs applied to home workers.
The spokesman said: “The inclusion in the budget announcement was to acknowledge how remote working has been an essential part of the response to the pandemic and ensure that taxpayers are fully aware of their entitlements.”
The spokesman said work was ongoing to review the current tax arrangements for remote working for employers and employees with a view to considering whether further changes would be needed in Budget 2022.
