Stay and Spend Incentive

The government, as part of it’s July Stimulus Plan , has announced a Stay and Spend Incentive.

They hope it will help boost out-of-season demand for the accommodation and food sectors.

The July stimulus introduces a new temporary income tax credit which is to be known as the “Stay and Spend Tax Credit”.

The stay and spend income tax credit can be claimed on expenditure on accommodation, food and non-alcoholic drinks. It only applies to spending between 1st October 2020 and 30th April 2021.

Taxpayers can claim an income tax credit of 20% of their spending but the maximum tax credit available per taxpayer is €125.

The tax credit is capped at just €12 per person.(€250 for jointly assessed couples). To get the maximum tax credit you would need to spend €625 (€1250 for a couple) .
The minimum spend per transaction is €25 – so loads of separate orders of cups of coffee over 6 months won’t be eligible!

A €100 spend will qualify for €20 tax credit.
A €300 spend will qualify for €60 tax credit
A €625 spend (or greater) will qualify for the maximum €125 tax credit.

A couple could claim a €250 tax credit on a spend of €1250 – but if they are assessed separately for tax they will need to split the payments and submit separate claims and receipts

A Tax Credit of €125 will reduce the income tax you pay in a year by €125 .
The tax credit may be set against a claimant’s USC liability if he/she can’t fully use it against income tax.

The period during which qualifying expenditure may be incurred runs from 1 October 2020 to 30 April 2021. However, there is scope for the Minister for Finance to extend the qualifying period up to 31 December 2021.

Is it Just Spending in Hotel that is Eligible ?

Two types of services qualify for relief under this section.

  • The provision of holiday accommodation that is registered with Fáilte Ireland – including
    1. accommodation in hotels, guest houses, B&Bs
    2. self-catering accommodation,
    3. caravan and camping parks, and holiday camps.
  • Sale of Food and drinks (excluding alcohol) served in a café, restaurant, hotel or pub may also qualify for relief. (Not takeaway)

To be eligible – the service provider will need to be registered for VAT and will also have to apply to Revenue to become an “eligible service provider”

All claimants will need to submit details of spending and receipts and claim the tax credit by an App. More details to follow as soon as we get them.

We can see that many people will possibly be put off by all the form filling and retention of receipts for the sake of a maximum of €125.

UK – Eat Out to Help Out Scheme

A scheme to encourage hospitality spending in the UK involves up to £10 per person off meals and non alcoholic drinks. It is only available on Mondays Tuesdays and Wednesdays in August 2020.
This is a much simpler scheme and has a much quicker payback time for the consumer. It also benefits non-taxpayers.

A family of 4 in the UK could easily benefit by £160 in August by eating out once a week and ordering food and drink worth £80 each time.
Consumers in Ireland can take advantage of this discount by eating out in Northern Ireland at participating pubs and restuarants.

More July Stimulus Incentives

As well as the Stay and Spend Incentive- the July Stimulus package also includes a reduction in the standard rate of VAT .

VAT on the hospitality sector is charged at 13.5% – so the standard VAT rate reduction will not affect or help them.
However, the potential saving of up to 20% may be a bigger incentive for consumers and will hopefully increase demand for domestic tourism in the winter and spring months.

A temporary increase to the levels of support in the Help to Buy incentive was also included in the July Stimulus package.

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