THE REVENUE COMMISSIONERS have explained how workers who received the Pandemic Unemployment Payment (PUP) or whose wages were subsidised by the Temporary Wage Subsidy Scheme (TWSS) will be able to pay back the tax they owe.
Today, Revenue has confirmed that workers will have the option to pay their taxes at the end of this year if they wish.
Alternatively, they can allow the Revenue to deduct the liabilities through reductions in the employees’ tax credits over a period of four years, starting in 2022.
Over the 22-week lifespan of the TWSS, employers did not deduct income tax payments from their employees’ wages, resulting in an accumulation of liabilities that have to be paid back.
The PUP is also considered taxable income, which was not taxed at the source.
At the end of 2020, the Revenue will present each employee who received payments under the TWSS or the PUP with a ‘preliminary end of year statement,’ outlining their liabilities.
According to the Revenue.ie website, “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.”
Once the preliminary statement is available, employees “can update their personal record, declare any additional income and claim additional tax credits due, such as qualifying health expenses” to arrive at their final liability for 2020.
This can be done online through the MyAccount portal on the Revenue website. Workers can then pay back whatever they owe.
“Otherwise,” according to the latest information, “Revenue will collect the liability, interest-free, by reducing the employees tax credits over 4 years to minimise any hardship. The reduction of tax credits will start in January 2022.”
Commenting on the fresh guidance, finance minister Paschal Donohoe said he was confident that any expected tax liability arising from the emergency payments will be “modest” for workers.
“But the facility is now there for the Revenue Commissioner to deal with this over a period of four years, therefore significantly easing any potential burden that may arise to any who have availed of this scheme,” he said.
The TWSS was replaced earlier this month by the Employment Wages Subsidy Scheme (EWSS). Under this new arrangement, employers are required to deduct income tax from their employees’ wages as normal.
This morning, Donohoe reminded employers that the new scheme is open for applications should they need support.
He said that as of today, “some 36,746 employers” have registered for the new scheme and that 82% of businesses that were availing of the TWSS when it ended in August, are now availing of the EWSS.
“This is a really considerable take-up,” the Dublin Central TD said. “It will offer continued support to hundreds of thousands of workers from August into September of this year.”
The EWSS is expected to cost approximately €2.2 billion by the end of March 2021 on top of the €2.7 billion paid out under its predecessor.
To embed this post, copy the code below on your site
have your say