Revenue update on flat rate expenses review

Today (13/11/2020), Revenue announced its decision to further defer the implementation of the findings of its review of the flat rate expenses (FRE) regime to 1 January 2022. Revenue’s decision has been taken in light of the Minister for Finance, Paschal Donohoe, T.D., outlining that deliberations are continuing on a number of policy options, set out in the Tax Strategy Group (TSG) paper on Income Tax, as to how the flat rate expense issue could be addressed.

Last year, Revenue concluded a comprehensive review of the FRE regime and indicated that the basis for some of the existing allowances was no longer valid. The review also highlighted that several aspects of the FRE regime warranted consideration from a tax policy and legislative perspective. To facilitate these considerations, Revenue deferred the implementation of its findings pending the outcome of a policy review by the TSG.

On 29 October 2020, the Minister for Finance wrote to Revenue Chairman, Niall Cody, noting that

'while the TSG did not reach specific conclusions on the [income tax] paper, the Group observed that, having regard to the huge disruption in the labour market brought about by COVID-19, the question of the appropriate timing of the introduction of any policy changes relating to the flat rate expenses regime was one that would require careful consideration.’

In his reply to the Minister on Monday (9/11/2020), Mr Cody said that

‘Revenue would have no objection to a further deferral of the implementation of the findings of the FRE regime to 1 January 2022, pending decisions by [the Minister] and [his] Department on the policy options put forward by the TSG on various matters relating to employment expenses and the enactment of legislative changes in that area, if any.’

Separately today (13/11/2020), Revenue advised that over the course of next week it will write to approximately 131,000 PAYE taxpayers who, in the last five years have paid tax but have not claimed any additional tax credits or reliefs. These taxpayers are being reminded that there is a four-year time limit for claiming tax refunds and the deadline for 2016 claims is 31 December 2020.

Revenue continues to encourage all PAYE taxpayers, even those who do not receive a letter next week, to regularly review their tax record and claim their entitlements to ensure they only pay the correct amount of tax. The quickest, easiest and most convenient way to claim entitlements is online using PAYE Services, which is available in Revenue’s myAccount portal.

Ends [13/11/2020]

Notes for the editor:

Copies of the letters between Minister for Finance, Paschal Donohoe and Revenue Chairman Niall Cody can be found from the press section of the website.