Revenue announced last week how they are going to deal with the tax implications associated with the Pandemic Unemployment Payment (PUP) and the Temporary Wage Subsidy Scheme (TWSS). Both of these payments are taxable but were not taxed at source as they were set up in such a rush at the beginning of the pandemic. Now Revenue have clarified exactly how people will pay the tax on them.
At the beginning of 2021, Revenue will issue a statement to each employee who got PUP/TWSS which will show how much they received as part of their PUP/TWSS payment and a calculation of their tax position. Employees will have time to review this statement to ensure it is accurate and at this point can claim any additional tax credits they might be due (e.g. medical expenses, flat rate expenses etc). After this has taken place, then a final liability will be issued.
At this point, employees can make the decision as to whether to settle any tax liability they might have or to defer payment. Employees can pay the tax due through their MyAccount on the Revenue website if they wish. Alternatively they can allow Revenue to claim back the tax due by reducing their tax credits over 4 years. The reduction of tax credits will begin in January 2022. This has been designed to reduce hardship on employees and remove any financial pressure.
Revenue press release is here.