Stay and spend: How does it work and how much will I save?

What’s not to love? You get to go on holidays in Ireland or eat out in your locality and get a state sponsored deduction.

Well, while many may welcome the Government’s new Stay and Spend scheme, aimed at boosting the country’s hospitality sector by offering a tax credit to consumers, others will unfortunately find the process too cumbersome to avail of.

And others still, such as those outside of the tax net, will find that they simply aren’t eligible for the scheme, while if you do make a claim, you could find out that you actually owe Revenue money.

What is Stay and Spend?

While it has been touted for months, the scheme finally went live yesterday, October 1st.

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A little bit like the UK’s Eat Out to Help Out scheme, the Government’s new Stay and Spend scheme is aimed at helping out Irish based hospitality businesses by incentivising taxpayers to spend their money in them.

Unlike the UK equivalent however, which offered a discount of £10 (€11) to the consumer at the point of purchase once the restaurant or hotel had registered with the scheme, the Irish scheme is a little bit trickier to manoeuvre.

How much can I get back?

But before we get to the nitty gritty of how it works, you’ll probably want to know much it’s worth to you. Well, while you can spend up to €625 on the scheme (or €1,250 for jointly assessed spouses), the maximum you can claim back is just €125 (€250 for a couple).

This is because the credit provides for a 20 per cent rebate on the amount you spend up to €625.

So, for example, if you spend €100 in a restaurant you’ll be entitled to get €20 back, or if you spend €625 between now and April 30th 2021 you’ll get €125 (625/20 per cent).

You’ll have to spend at least €25 each time (earning back €5 in tax credits), up to the aforementioned maximum of €625.

When will I get my money back?

A helpful way of thinking about the new scheme is to compare it with the current way of claiming back medical expenses. So, just like with these, should you spend between now and year-end, you can claim for the credit from January 2021, and if you spend between January and April of next year, you can claim in 2022. Revenue says that you should receive your credit shortly after you submit your claim, into your bank account.

Self-employed tax payers who spend money now, will have to wait until they file their 2020 tax return, which won’t be until end 2021, to avail of the credit.

Where can I spend it?

The credit is eligible to be used in a broad range of hospitality establishments, including hotels, B&Bs, caravan parks, restaurants, pubs and cafes.

In Dublin, you can spend it in hotels like the Merrion or Drury Court, restaurants like and pubs like the Greenhouse and One Pico, and pubs like Kehoes and the Stags Head.

Around the country, you can put the credit to use in Adare Manor in Co Limerick, Dromquinna Manor in Co Kerry or Paradiso in Cork city. But it's not just targeted at the high end; if you fancy offsetting the cost of a lunch in Eddie Rocket's or coffee and buns for a group in Costa Coffee, the scheme will also apply.

To check out the full list of restaurants and hotels offering the scheme check out the Revenue's directory here.

Watch out for the exclusions though; alcohol doesn’t qualify, and nor do non-alcoholic drinks when they’re bought without food. And for Dublin and Donegal residents ,in particular at the moment given Covid restrictions, food and drinks provided on a take-away basis do not qualify for the credit.

How does it work?

Now the tricky part. To make a claim for the scheme you need to keep receipts each time you make a qualifying payment – and the receipt needs to be itemised, so alcohol etc doesn’t get rolled into the amount to be claimed.

So if dining out with a friend, you’ll need to get two separate receipts if you both want to claim. You can then upload these receipts to the Revenue Receipts Tracker App, by taking a photo with your phone and downloading the app.

If you don’t have a phone, you have to submit your claims either online (via myAccount) or by post to the Revenue. If you already claim for medical expenses, you may be already familiar with this process.

In addition to uploading your receipts, you then have to submit an annual tax return to complete your claim.

If you’re a PAYE worker, you may never have done this before, but Stay and Spend requires you to fill out a Form 12, like you may already do for claiming medical expenses etc. This can be done via the Revenue’s myAccount service. Self employed taxpayers and those who already file a Form 11 can claim for the credit through this form via Ros.

The scheme seems to be trying to kill two birds with the one stone; incentivising the hospitality sector and bringing more people into the habit of filing a tax return.

And with a tax return comes another issue. A Form 12 is a little like a balancing statement of old, whereby you asked Revenue to reassess your taxes to ensure you didn’t (you hoped) pay too much in tax during the year.

Of course this means that by applying for a Stay and Spend credit, you could find that you paid too little tax during the year.

A spokesman for Revenue says that if you have underpaid your taxes during the year, then the Stay and Spend credit will go towards offsetting this, rather than being deposited into your bank account.

On the other hand, if you’ve paid the right amount, or too much tax, then you will get the refund.

Is anyone excluded?

Another downside of the scheme is who is covered by it. As the scheme only applies to taxpayers, you need to have a tax bill to be able to offset the eating out/accomodation expenses against.

As the Revenue says, to be eligible for the scheme, you must have “sufficient income tax or USC liabilities to offset against the credit”.

And figures from Revenue show that some 772,000 income earners in Ireland pay neither income tax nor USC, which means that a significant cohort won’t be eligible for the scheme.

So, if you’re outside the tax net, for example because you’re a student, on a welfare payment or are an old age pensioner who pays no tax, you won’t be able to benefit at all.