The government, as part of it’s July Stimulus Plan , has announced a Stay and Spend Scheme.
They hope it will help boost out-of-season demand for the accommodation and food sectors.
The July stimulus introduced 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. This is a total maximum – NOT a maximum per year.
The tax credit is capped at just €125 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 small orders of cake and coffee over 6 months won’t be eligible!
A €100 spend will qualify for a €20 tax credit.
A €300 spend will qualify for a €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 spend and stay 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. The maximum €125 tax credit is to cover tax years 2020 and 2021 – it is not €125 per tax year.
Any expenditure up to Dec 31st 2020 can be claimed on 2020 tax returns Expenditure from Jan 1st 2021 to April 30th 2021 will need to be claimed on 2021 tax returns.
Is it Just Spending in Hotels 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
- accommodation in hotels, guest houses, B&Bs
- self-catering accommodation,
- 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)
- But if non-alcoholic drinks are provided without any food, the cost will not be qualifying expenditure.
How to Claim
To be eligible – a service provider will need to be registered for VAT and will also have to apply to Revenue to become an “eligible service provider”.
Full details of how to register as a service provider can be found here
Consumers can check the list of registered providers HERE
Claims for the tax credit must be supported with proof of the qualifying expenditure incurred. Revenue suggests that the best way to submit proof of expenditure is to take a picture of the receipt and submit it through the Revenue Receipts Tracker App.
If you pay tax through PAYE you will need to claim by submitting an income tax return (Form 12) for the 2020 period. The earliest this can be done is Jan 1st 2021.
This is the same in respect of claims for medical expenses, employment expenses, etc. Taxpayers can file and submit their Form 12 online via Revenue’s “myAccount”
Once a Form 12 is completed, Revenue will review any refund due and it should get paid within a few weeks of the receipt of the tax return.
If you are self-employed you will need to make a “stay and spend” claim on your Form 11 tax return for the 2020 period. (or 2021 if applicable). Your total tax payable will be reduced by the amount of the Stay & Spend Tax Credit.
Any expenditure up to Dec 31st 2020 can be claimed on 2020 tax returns Expenditure from Jan 1st 2021 will need to be claimed on 2021 tax returns.
The maximum tax credit of €125 is over the 2 years.
We can see that many people will possibly be put off by all the form filling and retention of receipts. All for the sake of a maximum of €125 refund on a spend of €625
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. (Total spend of £320)
The Irish Spend and Stay incentive will refund just €80 tax on a spend of €320.
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.