The Minister for Finance announced the Home Renovation Incentive (HRI) in his Budget 2014 speech on 15 October 2013. Following on from this, Revenue announced the launch of the new electronic system to administer the Home Renovation Incentive. HRI online is now available to both contractors and homeowners.
HRI online is simple to use and allows tax compliant contractors to enter details of qualifying works and payments through the Home Renovation Incentive link on the Revenue On-Line Service (ROS).
The homeowner can “look up” qualifying works and payment details through the HRI online link. By viewing the qualifying works and payments online, the homeowner can see that the contractor is a qualifying contractor and does not need to look for tax clearance certificates or any other proof of tax compliance.
The scheme itself provides for a new tax credit for homeowners. It will be given by way of an Income Tax credit at 13.5% of qualifying expenditure incurred on repair, renovation or improvement work carried out by tax compliant contractors on a homeowner’s principal private residence.
Effectively the Incentive gives an Income Tax credit, equivalent to the VAT charged on amounts from €4,405 to €30,000 (excl VAT).
An updated guide on the Incentive and updated Frequently Asked Questions are also available. An instructional video will be available shortly on www.revenue.ie to assist both contractors and homeowners.
Work carried out and paid for between 25 October 2013 and 9 April 2014
If a homeowner had HRI qualifying work carried out and paid for during this time, the homeowner should contact the contractor. The contractor has until 8 May 2014 to enter the details to HRI online. Indeed, since its release the system has already been used by contractors to record qualifying works and payments.
It is important to point out that the homeowner won’t be able to claim the HRI tax credit if the details aren’t on HRI online.
Level Playing Field
Commenting on the system, Josephine Feehily, Revenue Chairman, said that
“The development of an easy to use, online system for this new scheme is a really important innovation. It gives compliant contractors and the legitimate trade a great opportunity to actually undercut rogue traders. The homeowner can look up online the work and payment details, and early next year will be able to claim the tax credit online.”
“HRI online builds on the approach used in Relevant Contracts Tax (RCT) in the construction sector. It removes paper from the system, provides homeowners with assurance that the contractor is operating within the tax system, gives tax compliant contractors the opportunity to compete aggressively with ‘rogue’ operators and reduces the opportunity for fraud and tax evasion.”
She went on to say that:
“Data from our RCT system shows a decided increase in construction activity since the middle of last year and the introduction of the HRI is leading to increased activity in home renovation activity. This is leading to a gradual pick-up in employment and self-employment activity in the construction sector. It is essential that contractors register for tax, VAT and RCT, to make sure that they can get access to the HRI. We are aware that, with the collapse in the sector in 2008, some of those who were active in the sector have been working on a casual/nixer basis as opportunities arose over the last few years. Now is the time to register with us and regularise your tax affairs. The reality is that due to the extent of the collapse, significant tax issues are unlikely to arise for those involved. “
In conclusion, she stressed that the HRI online is easy to use for homeowners and contractors. Revenue is keen that homeowners are aware of its availability and that the playing field is pitched back in favour of legitimate contractors.