Employees given option to pay tax bills resulting from Covid-19 wage subsidy schemes over four years
Hundreds of thousands of employees in Ireland have benefitted from the Pandemic Unemployment Payment (PUP) and the Temporary Wage Subsidy Scheme (TWSS) to date.
Employees who have benefitted from the Pandemic Unemployment Payment (PUP) and the Temporary Wage Subsidy Scheme (TWSS) will be given the option to pay off any accruing tax bills over a four-year period.
Concerns have been voiced in recent months about the tax implications for the hundreds of thousands of employees who had been in receipt of the PUP or whose wages have or had been subsidised by the government since the subsidy schemes were introduced in March.
PUP and TWSS payments were not taxed in real-time and instead are liable to income tax and USC at the end of the year.
On Friday, however, Revenue confirmed that all employees, including those in receipt of the PUP or TWSS payments, will be presented with a Preliminary End of Year Statement in January 2021 detailing their income tax and USC position for 2020.
Employees will be given the option to pay partially or fully any income tax and USC liability if they so wish.
Otherwise, the interest-free liability will be collected by Revenue by reducing employees’ tax credits over four years to minimise any hardship, starting in January 2022.
Outlining the details of the announcement made on Friday, Revenue spokesperson Declan Rigney said: “In January 2021, Revenue will make a Preliminary End of Year Statement available to all employees, including those who were in receipt of the TWSS or PUP.
"The Preliminary End of Year Statement will include pre-populated information showing the amount of TWSS and/or PUP payments, if any, received by the employee concerned according to Revenue records.
“The statement will also provide employees with a preliminary calculation of their income tax and USC position for 2020 and will indicate whether their tax position is balanced, underpaid or overpaid for the year.
“When the Preliminary End of Year Statement is available, employees will have an opportunity to update their personal record, declare any additional income and claim additional tax credits due, such as qualifying health expenses, via myAccount, to arrive at their final liability for 2020.”
“Employees will be given the opportunity to fully or partially pay any income tax and USC liability through the Payments/Repayments facility in myAccount,” Rigney added.
“Otherwise, Revenue will collect the liability, interest free, by reducing the employees tax credits over four years to minimise any hardship. The reduction of tax credits will start in January 2022.”