REMOTE WORK ALLOWANCE Understanding the Work From Home Allowance scheme

Last updated: May 20, 2024

As the landscape of work shifts towards more flexible arrangements, understanding the nuances of tax relief and allowances for remote working is crucial. A key component of this is the Remote Working Daily Allowance of €3.20 per day. This guidance article aims to help you understand this allowance and its implications for both employers and employees.

Man having a business call at his desk with a laptop, illustrating Work From Home Allowance scheme in Ireland.
Understanding the Remote Working Allowance

Guidance on the Working From Home Allowance of €3.20 Per Day

The shift towards Remote Working has brought forward various financial considerations, including the understanding of the Remote Working Daily Allowance. The Irish Revenue operates an administrative practice allowing employers to offer their employees a daily allowance of up to €3.20 for Remote Working. This guide provides an overview of this allowance and its application.

What is the Working From Home Allowance?

  • Amount: Up to €3.20 per day.
  • Purpose: To cover additional expenses incurred by employees when Working From Home, such as heating, electricity, and broadband.
  • Voluntary: It's important to note that there is no legal obligation for employers to provide this payment, and it remains at their discretion.

If you are an Ongoing Accounting client of Incorpro, then you can manage your employee payroll and provide the Working From Home Allowance via your MyIncorpro account.

Eligibility Criteria

  1. Agreement to Work From Home: There must be an agreement between the employer and employee that the employee will Work From Home.
  2. Substantive Duties at Home: The employee must perform substantive duties of their employment from their home.
  3. Substantial Work Duration at Home: The employee must work from home for substantial periods.

Tax Treatment

  • No Deduction of Taxes: Payments up to €3.20 per day are made without deducting PAYE (Pay As You Earn), PRSI (Pay Related Social Insurance), and USC (Universal Social Charge).
  • Excess Payments: Any amount over €3.20 per day provided by the employer is subject to standard taxation (PAYE, PRSI, USC).

Record-Keeping

Under Enhanced Reporting Requirements introduced on 1 January 2024, the Employer is responsible for reporting the following details for on or before the payment of the allowance:

  • total number of days,
  • amount paid,
  • date paid.

The employer must also keep records of any payments made as part of this practice for potential future Revenue compliance reviews.

Key Considerations

  • Discretionary Nature: Employers are not legally required to provide this allowance; it is at their discretion.
  • Impact on Remote Working Relief (RWR): If an employer reimburses an employee for expenses incurred while Working From Home, this must be deducted from any RWR claim the employee makes.

Conclusion

The Working From Home allowance of €3.20 per day serves as a supportive measure for employees incurring additional expenses due to Remote Working. While optional for employers, it offers a tax-efficient way to assist employees. Both employers and employees should understand the eligibility criteria, tax implications, and record-keeping requirements associated with this allowance​​.

Further Guidance and Assistance

Should you have any queries or require assistance with your Accounting and Tax needs, our dedicated team at Incorpro is here to help. Connect with us by calling 01-4429409, or visit our Contact Page for more ways to get in touch. Stay updated and engaged by following our Social Media Pages on Twitter, Facebook, LinkedIn and Instagram.

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