Paschal Donohoe chose cheapest tax break for home workers in Budget - turning down two more generous options

By Ken Foxe

Paschal Donohoe chose the cheapest tax break option in the Budget for those working from home, it emerged yesterday.

The Finance Minister ruled out more generous packages and opted for a scheme mired in red tape which is valued at just €51 a year to earners on the lower rate.

The news comes as 5,959 Covid-19 cases were recorded yesterday – the sixth highest daily figure since the start of the outbreak.

A department submission reveals how two more generous and much simpler options to reward home-workers were ruled out in pre-budget discussions.

Instead, Minister Donohoe opted for the least expensive option of the three and one that involved “most effort” for workers planning to make a claim.

Officials proposed a €1.50 per day deduction that could be claimed by employees with a cap of two days a week – worth the equivalent of up to €150 each year.

The estimated overall cost of this was put at around €20million and it had the added bonus of reducing the “administrative burden” in making a claim.

A second option to provide a simple tax credit that could easily be claimed by workers was also floated, which had an estimated cost of €25million.

However, Minister Donohoe opted to stick with a plan where workers could claim on up to 30% of their annual electricity, heat and broadband bills.

Officials estimated this would cost €10.8 million and should be put on a permanent formal footing to give certainty to employers and workers.

The anticipated value of the relief will be around €103 annually for workers paying tax at a 40% rate, and about €51 per year for those on the lower rate.

A departmental submission considered the Minister’s preferred option as efficient in the “use of Exchequer resources” and also well-targeted towards home workers.

The submission said: “However, Option A would require the most effort for a worker to make a claim.”

Tens of thousands of workers have been based away from offices during the pandemic - with the Government ordering a return to working from home where possible this week.

The submission said the government wanted to make “remote working” a permanent fixture of working life rather than something temporary during the pandemic.

It said there were “economic, social, and environmental benefits” to this and that a high-profile change to tax relief would underline it.

A spokesman for the Department of Finance said they had nothing further to add to the records.

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