Revenue issued thousands of notices to employees who have a tax liability due to the Temporary Wages Subsidy Scheme (TWSS). On 24 March 2020 the Government announced new measures to provide financial support to workers affected by the Covid-19 crisis. As part of these measures, Revenue introduced a COVID-19 Temporary Wage Subsidy Scheme commencing on 26 March 2020. The Temporary Wage Subsidy Scheme was introduced by the Emergency Measures in the Public Interest (Covid-19) Act 2020. The scheme, enabled employees, whose employers are affected by the pandemic, to receive significant supports directly from their employer. Originally approved for 12 weeks, on 5 June 2020 the scheme was extended until the end of August 2020.

Employers were encouraged to sign up for the TWSS where the employer’s business activities had experienced significant negative disruption due to the COVID-19 (Coronavirus) pandemic.     Under the TWSS, the payments are liable to income tax and USC; however, the subsidy is not taxable in real-time through the PAYE system during the period of the Subsidy scheme.   Instead the employee is liable for tax and USC on the subsidy amount paid to them by their employer by way of review at the end of the year.

It’s Pay Back Time!

As the old saying goes, nothing in this life is free . The time has come to balance up the books and pay over any tax liability arising.

Paying the liability

Statements are beginning to issue to all employees This may come as a shock to employees who have not previously had a tax liability. Revenue have confirmed they will allow employees who have a liability to pay this back over four years. This is done by reducing the employees tax credits over the 4 year period to cover the tax liability owed.

Employer paying liability on behalf of staff

An employer can opt to pay this liability on behalf of the employees. Some employers have suffered, are still suffering drastically as a result of the Covid 19 pandemic and may not be in a position to offer to pay the tax liabilities arising for their staff. This may cause tension between the employer and employee who will no doubt have colleagues whose employers are better placed and can afford to take over these liabilities. It is tough as employers were encouraged to seek support and that very support could cost them an employee. If the employer is in a position to cover the liabilities arising, Revenue have advised that no benefit in kind will arise on this payment and there will be no additional tax on this payment by the employer. It is important that the employer gets documentary evidence from the employee on the liability arising. This will be provided on the statement sent to the employee by Revenue through the Revenue online system.

If the employer opts to pay the liability on behalf of the employee they should either:

·       Transfer to amount owed directly to the employee

·       Amend the last payroll submission of 2020

If you have any queries on this scheme or require any assistance with your payroll please contact us today for a consultation.