'Shock’ tax bill for Covid-19 wage subsidy scheme

But Revenue has confirmed that 80% of PAYE workers were either in balance, overpaid or underpaid by less than €200 for the tax year of 2020 when they benefited from the relief.

The Temporary Wage Subsidy Scheme (TWSS) was introduced by Government on March 24, 2020 at the start of the Covid-19 Pandemic.

Just over 37,000 employees in Galway City and County were in receipt of the payment as the businesses they worked for were closed or severely curtailed by the lockdown. It allowed employers to continue to pay wages to workers.

It was to last for 12 weeks but was extended until August 31, 2020, and cost the Exchequer €2.8 billion, before being replaced by a different scheme.

Revenue confirmed to the Galway City Tribune that as of May of this year, the total amount of ‘warehoused debt’ nationwide relating to TWSS was €53m. This means the debt was ‘parked’ but is still liable.

It said that TWSS payments were treated as income, and so were taxable, subject to Universal Social Charge and income tax. The TWSS payments were not taxed in ‘real-time’ but became liable at the end of 2020.

This was “due to the need to get critical cash supports in the shortest timeframe possible to impacted employers and employees”.

Revenue said that it gave an End of Year Statement to all employees in January 2021, which detailed whether they owed tax on the wage subsidy income earned.

“Over 80% of PAYE taxpayers had a preliminary end of year tax position for 2020 that was either balanced, overpaid or underpaid by less than €200,” a spokesperson said.

PAYE taxpayers can finalise their tax position for 2020 by completing an income tax return. Revenue said that any liabilities can be offset against tax credits due, such as from qualifying medical expenses.

“Where the taxpayer does not opt to fully or partially pay, Revenue will collect the liability by reducing their tax credits over years, interest free, from January 2022,” a spokesperson said.

Revenue said it would collect any tax owing, interest free, over four-years, which “equates to a collection of €1 extra in tax per week for those with an underpayment of €200”.

A Galway City Tribune reader who attempted to claim medical expenses was shocked to learn that she had a liability of €1,800 from unpaid income tax earned from the TWSS.

Revenue would not comment on individual cases but said: “An individual’s tax liability for any given tax year depends on a number of factors, including their personal circumstances, the expenses incurred by them for which a tax credit or relief may be available and the amount of tax they paid throughout the year.”

Statisticss on the number of workers in Galway who have a TWSS tax bill outstanding, and the total amount they owe, are not available.

Meanwhile, Revenue confirmed its public office at Fairgreen remains closed to the public. Only its Dublin office is open to the public, where Revenue is trialling an in-person appointments service.

“We continue to provide a full range of online services for taxpayers to manage their tax affairs, which for the most part removes any requirement to access public offices. For customers that are not comfortable with using online services, we provide an extensive telephone service, in addition to a full service for queries being received through the postal system,” it said.