Debt And Taxes


From top: Pandemic Unemployment Payment form; Catherine Murphy


Social Democrats co-leader Catherine Murphy , in a written question, asked the Minister for Finance Paschal Donohoe to reveal what orders he has given to the Revenue Commissioners regarding tax liabilities for recipients of the wage subsidy scheme and the Pandemic Unemployment Payment  PUP) .

The Minister for Finance responded:

On 25 September in a public announcement Revenue set out how any tax liability arising on the Temporary Wage Subsidy Scheme (TWSS) and the Pandemic Unemployment Payment (PUP) will be dealt with.

Revenue officials sent a copy of its press release to my Department for information prior to publication. There was no instruction from me or my officials to Revenue in relation to this matter.

While the expected tax liability should be modest in most cases, the position as set out by Revenue is very welcome and is a further demonstration of how we will continue to work to minimise financial hardship to the greatest extent possible on taxpayers challenged by COVID-19.

While most income is liable to income tax and the Universal Social Charge (USC) and is deducted in real-time as and when the person is paid, the TWSS and PUP payments were not taxed in real-time and are instead liable to income tax and USC at the end of this year.

Revenue will make a Preliminary End of Year Statement available to all employees in January 2021, including those who were in receipt of the TWSS or PUP. The Preliminary End of Year Statement includes information relating to an employee’s income received, including pensions and income from the Department of Social Protection, Community and Rural Development, and the Islands, as well as their tax credit entitlements.

For the tax year 2020, the Statement will also include information on the amounts of TWSS/PUP payments, if any, received by each employee. In addition, the Statement will provide employees with a preliminary calculation of the income tax and USC position for 2020 and will indicate whether their tax position is balanced, underpaid or overpaid for the year.

Upon viewing the Preliminary End of Year Statement through myAccount, which is Revenue’s secure online facility for individual taxpayer services, employees will have an opportunity to update their personal record, declare any additional income and claim any additional tax credits due, for example qualifying health expenses, to arrive at their final liability for 2020.

Where a liability is finalised, individuals may opt to fully or partially pay any income tax and USC liability through the Payments/Repayments facility in myAccount. Where individuals do not opt to fully or partially pay, Revenue will collect the liability by reducing their tax credits over 4 years, interest free. The reduction of tax credits will start in January 2022.


Previously: Liable To Income Tax And PRSI


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15 thoughts on “Debt And Taxes

  1. wearnicehats

    It’s remarkably fair by Revenue standards and it was always flagged as going to happen since the TWSS started. The liability will be negligible for most people especially when spread over 4 years. Only this week I’ve seen several companies get compliance requests from Revenue – obviously in advance of this reconciliation – so I’d expect that this has gone out to all companies who claimed the TWSS. Again, perfectly acceptable. I’ve been really impressed with the way that Revenue have dealt with all this since March, in particular they have been much more approachable and flexible since they started working from home. It’s more human to have to pause a serious VAT query conversation depending on which of you has a dog barking at the postman.

    1. Cú Chulainn

      It’s an absolute outrage that the Revenue have chosen to deduct from employees. The cost, should they wish to collect it, should be on the company who accepted the cash. Employees had no choice in the operation of the TWSS. This is criminal in my opinion.

      1. Mick

        I don’t understand what you think is criminal about this. The employee was paid this money through their employer, to the employee it just looked like wages. But it wasn’t taxed at source. The employee bears the tax liability, so the employee should have to pay the tax.

        For most people, the tax liability will be quite small, as they would have been getting only €350 or thereabouts per week. I’m no tax specialist, but by my back of a napkin rough working out, it’d work out at around €10 per week, including USC. If they were on PUP/TWSS for about 6 months, that’s €260, spread across 4 years, that’s a weekly reduction in tax credits of €1.25.

        Most people would be able to handle that, I’d say.

        1. Cú Chulainn

          So, the reason it is criminal in my opinion is because it is theft: the company paid an employee as normal. The company notified the Revenue it had paid the employee and the company was then refunded the salary amount paid to the employee. The company then made the paye return. To the employee, all that happened was that they were paid as normal. The company didn’t pay the employees paye, as it is legally obliged to do, In agreement with the revenue. This arrangement is between the company and the revenue and for the revenue to now expect the employee to pay the company’s tax is, in my opinion, theft.

          1. ian-oh

            @Cú Chulainn – sure sounds that way to me?

            Essentially workers were paid as if they had already been taxed their usual rate, then they also have to pay additional tax on top of that and the company got a bail out?

            No wonder people have no faith in the current government or the last.

          2. Cian

            No, income tax has not been paid on this amount.

            There are two separate issues.
            PUP was paid directly by Social Welfare. This is classes as income and is taxable (if you earn enough across the year). Once you go back to work that money is part of your income for the year and you need to pay income tax/USC on it.
            For a single week, if you earn €350, this would be taxed at 20% = €70; and your tax credit for the week is €63.46. net tax of €6.54; + USC of €3.54 = €10.08

            TWSS was paid by your employer and they were instructed not to change income tax or USC.

            In neither case was tax or USC already paid.

        2. ian-oh

          Thankfully I wasn’t in receipt of this but I know plenty who were, but my understanding is that employee earns the same pay with the covid payment topping them up to their normal, which is based on what they would already have gotten AFTER payment of income tax, but now they have to pay additional moneys so essentially they are now losing out – even if its only a tenner a week that is absolutely wrong. How many weeks did this go on for? 12, 15, 20? I have no idea myself but why should someone be €200 out of pocket on this? It was just shoved on them with no choice. As a PAYE worker surely its up to your employer to do all this, if not, then why are people being presented with the worst aspect of being both PAYE and self employed? Sounds incredibly unfair to me.

          This will not be the end of this I can tell you and it sounds like the employee is getting shafted completely.

          1. wearnicehats

            Nobody is getting shafted here. The people who are affected by this are people who got more money from the Revenue than they should have got. There were many people pulling down €350 a week for April and May who had jobs in February paying them €100 a week (by their choice to only work a few hours a week) This was taken care of in the May revision – this is where the January/February net tax came in. It also marked the point where all those people above realised that they were much better off not working.

            When the Revenue first brought in the scheme in March there was a timelag glitch of a couple of weeks where payroll systems still – necessarily – had employees on a cumulative basis. That meant that for the first couple of weeks some people got quite large PAYE refunds that they were not entitled to. This is because employers who had put staff on lay-off were obliged by the Revenue to P45 them. So the system wrongly assumed that some of them were due tax back. This glitch was removed when the revenue RPN download set all the payroll systems to a week 1 basis a couple of weeks later

            Aside from that you need to understand how tax credits work and how the net pay for non fixed salary workers can vary throughout the year based on the proportioning out of those credits. If you take your net pay in February and extrapolate it up to a Gross amount, that Gross amount will not necessarily be the same in May for the same net.

            Anyway – take it from me that the only money coming back is money that you shouldn’t have had in the first place. They are repaying a loan that, in most cases, they didn’t realise they’d been given. To think otherwise is tinfoil hat stuff.

          2. Cú Chulainn

            Once again: on the TWSS, an employee received their After Tax salary. They are now being taxed on that. That is wrong. It amounts to a sneaky double taxation. Particularly as the company was refunded.

          3. Cú Chulainn

            I think you haven’t a clue what you’re talking about.. go back and actually pay attention to what’s happening..

        3. NoName

          Yeah you don’t seem to know what you are talking about. I think you are talking about the PUP (dole) instead of the wage subsidy. I was on it. From April through to August, I hired an accountant and he told me I will owe 2700 in tax on this.

          Now tell me how that is fair? I got no notice other than an email a few days before pay day. No indication of what this would mean. No discussion. No reduced hours. I continued to work full time, same output from home for the entirety.

      2. Cian

        If a company accepted the money and paid it to the employee in their usual payroll – then the employee will already have paid all the tax they owe.

        This only would arise if a person wasn’t being paid by their employer and got the payment directly from Social Welfare.

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