25 Sep 2020 | 12.44 pm
Wage Subsidy Taxes Spread Over Four Years
Starting in 2022
25 Sep 2020 | 12.44 pm
Liabilities for income tax and USC that arise from uptake of the Temporary Wage Subsidy Scheme and the Pandemic Unemployment Payment are to be collected over four years, beginning in 2022.
The Employment Wage Subsidy Scheme replaced the TWSS on September 1 and almost 38,000 employers have now registered for it. It is a direct employer subsidy to support viable firms and encourage employment, including prospective employment of new hires and seasonal workers.
The EWSS delivers a flat-rate subsidy based on the number of qualifying employees in a company. In addition, employers benefit from a reduced rate of employers’ PRSI at a rate of 0.5%. The primary condition for qualification is that turnover in the third or last quarter of this year be down at least 70% on the same period in 2019.
Four out of five employers who were availing of the TWSS when it finished at the end of August have applied for the EWSS.
Finance minister Paschal Donohoe (pictured) said the Revenue’s announcement would significantly ease any potential burden on those with a tax liability as a result of availing of the schemes.
“I acknowledge Revenue’s responsiveness throughout this year, having already implemented measures to warehouse tax liabilities and reduced interest rates on outstanding tax debt,” the minister stated..
“I also welcome Revenue’s latest announcement outlining the very flexible approach that they will take, including the collection of any outstanding USC and income tax liabilities that may arise over an extended period of four years, beginning in 2022.“
Revenue spokesman Declan Rigney said that 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.
Rigney explained: “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. Otherwise, Revenue will collect the liability, interest free, by reducing the employee’s tax credits over four years to minimise any hardship. The reduction of tax credits will start in January 2022.”
Marian Ryan, consumer tax manager at Taxback.com, commented that the announcement should provide some sense of certainty to those who were concerned about how and when they would have to pay this tax.
“Earlier this year we ran some numbers which suggested that employees on the TWSS who received an income top-up from their employer will face a tax bill of between €300 and €2,830 depending on their income,” said Ryan.
• There are details on the Revenue’s website covering TWSS ‘Sweepback’ tax arrangements here.