Marketing

Thousands of workers to get Covid-19 tax bills 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.

While large, the €19 billion overall general Government deficit for last year is significantly smaller than feared, reflecting stronger-than-expected income tax and corporation tax receipts. It means Ireland is likely to have the smallest Government budget deficit of any euro-area country in 2020.

Tax returns

Meanwhile, Revenue has confirmed that all PAYE workers will receive preliminary end-of-year statements next Friday, January 15th, which will detail their tax position for 2020. This year, the more than 660,000 people who received at least one payment via the TWSS may face an unexpected tax bill. While Revenue has been clear from the start that there would be a tax implication with the subsidies, many workers will be unaware of the extent of these bills. And the potential liabilities may be substantial.

READ  Avolon orders 100 Airbus aircraft valued at €10bn

Norah Collender, professional tax leader with Chartered Accountants Ireland, has suggested that someone who received the average weekly payment of €280 on the TWSS could face a tax bill of about € 1,167.

Employees can find out how much they owe by accessing the Revenue’s online service, myaccount,.ie. A spokeswoman said it will also write to those who owe money in the first quarter of the year.

Revenue has confirmed employers can cover the tax shortfalls without incurring a benefit-in-kind liability for their employees. But Ms Collender does not expect many employers will do this as those claiming TWSS have typically been the most affected by difficult trading conditions arising from the pandemic.




READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.