Here's how Revenue will collect taxes owed on wage subsidy or Covid unemployment payments

Details of how workers can repay any tax liabilities due on money received under the Temporary Wage Subsidy Scheme and Pandemic Unemployment Payment have been revealed.

Anyone who opts not to pay tax liabilities due at the end of this year can instead have their tax credit reduced for a period of four years.

Outlining Revenue’s approach to collecting income tax and Universal Social Charge (USC) liabilities if they arise, spokesperson, Declan Rigney said: “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.”

The situation arose as usually income tax and USC due from employees is deducted in real time when an employee is paid by their employer.

However, Temporary Wage Subsidy Scheme (TWSS) and Pandemic Unemployment Payment (PUP) payments were not taxed in real time and instead are liable to income tax and USC at the end of the year (2020).

Outlining the details of the announcement, Rigney explained: “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.

“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 can then fully or partially pay any liability. Otherwise Revenue will reduce the employees tax credit over a four year period to collect the liability, without interest accruing.