According to the Irish Times, the Revenue are set to tell wage-subsidy recipients how much they owe next week

Thousands of workers who availed of State wage subsidies during 2020 will be informed next week by Revenue of any outstanding tax liability associated with those payments.

The shortfalls, which could be more than €1,000 for some employees, arise because when the Government rushed to introduce schemes as the Covid-19 pandemic hit last March it did not allow for subsidies to be taxed at source. This means that those who received payments, such as the Temporary Wage Subsidy Scheme (TWSS) and Pandemic Unemployment Payment,must now arrange to settle bills, where they arise, on those payments.

The move from Revenue to collect unpaid taxes comes as the Government disclosed that weaker tax receipts for 2020, as well as Covid-related spending, are set to push public finances deep into the red. Exchequer returns for 2020, published by the Department of Finance on Tuesday, reveal that the budget deficit for 2020 is expected to be €19 billion. This contrasts with a surplus of €1.4 billion in 2019.

Source: IRISH TIMES

Back in October the Irish Times reported that three-quarters of taxpayers believed the Government should waive tax bills and that most people never understood they were building up tax bills under Covid wage subsidy schemes.

The temporary wage subsidy scheme (TWSS) brought pay up to a maximum 85 per cent of net weekly pay. It also allowed employers, where they could afford it, to top that figure up to a maximum of 100 per cent of net weekly pay.

At the time, it was a critical support for companies struggling to keep operating and for their workers. More than 663,000 people availed of the payment at some point. It has since evolved into the employment wage subsidy scheme which is paid at a lower rate.

The money was paid without any tax being deducted by Revenue. Many people, who were used to tax being deducted at source, assumed there was no tax liability due for the payments. This was reinforced for them as the money they received was equal to or less than they normally received after tax from their employer.

Payback period

However, the Revenue Commissioners stated that tax would be liable on the payments and that the amounts due would become clear at the end of the tax year.

Source: IRISH TIMES

According to Revenue.ie the following information applies;

COVID-19 Pandemic Unemployment Payment (PUP) tax liability

PUP is available to employees and the self-employed who have lost their job on or after 13 March 2020 due to the COVID-19 pandemic. PUP is paid by the Department of Social Protection (DSP).

PUP is not taxed in real-time (when it is paid). It is liable to Income Tax (IT) at the end of the year.

How PUP is taxed

In January 2021, Revenue will make a Preliminary End of Year Statement available to you. The Preliminary End of Year Statement will show:

• detail of any income received and reported by your employer or employers
• information on the amount of PUP you received
• a preliminary calculation of your IT and USC for 2020
• whether your tax position is balanced, underpaid or overpaid for the year.

What you need to do

When the Preliminary End of Year Statement is available, you will have an opportunity to update your personal record in myAccount. You can do this by completing an Income Tax Return to:

• declare any additional income
• and
• claim any additional tax credits due, such as qualifying health expenses or the Stay and Spend Credit.

The additional information that you provide may impact your final IT or USC position.

What happens if you owe IT?

You can either fully or partially pay any IT liability through the 'Payments/Repayments' facility in myAccount.

Alternatively Revenue will collect the full or any remaining liability, interest free, by reducing your tax credits over four years (2022 to 2025).

The reduction of tax credits will start in January 2022.