TWSS and PUP tax calculations to issue via MyAccount

Jan 07, 2021

From 15 January, Revenue will issue Preliminary End of Year Statements setting out draft over/under payments of tax to over 660,000 TWSS recipients, and to PUP recipients. These statements will be available to taxpayers through myAccount and Revenue will follow up with letters on a phased basis advising taxpayers to complete a return.  As many of the taxpayers impacted have no experience of dealing with tax outside of the PAYE system, it is likely that this measure will give rise to questions and concerns.  Chartered Accountants Ireland’s Next Financial Year policy paper (p.15) and the CCAB-I’s 2021 Pre-Budget submission (p.7) made representations to the Government in the summer of 2020 to issue clear guidance and raise public awareness on how the tax due on TWSS and PUP payments would be collected. 

TWSS payments are subject to income tax and USC. These payments were not taxed in real time, as ordinarily experienced by PAYE workers, and as such Revenue is seeking to collect the tax due from these employees directly. Revenue’s calculation of tax over or underpaid by those in receipt of the TWSS is based on information provided by the employer through the TWSS reconciliation process.  Payments made to employees under the Employer Refund Scheme (ERS) during 2020 are also subject to income tax and USC, and will be included in an employee’s Preliminary End of Year Statement. PUP payments are subject to income tax only.

The amount of tax payable by each individual taxpayer will depend on their circumstances, such as their total earnings during the year, refunds received from Revenue during the year and their applicable tax rates, bands and credits.

Paying tax on 2020 income

Revenue is providing two options for taxpayers with an underpayment of tax of less than €6,000 in 2020.

  • Option 1 – Pay the liability fully or in part through Revpay in myAccount; or
  • Option 2 – Have the full or remaining liability collected, without incurring any interest, by reducing tax credits from 2022 over a maximum of 4 years.

Where an underpayment of tax amounts to €6,000 or more, a demand notice will issue to the taxpayer. A taxpayer may then arrange to have up to €6,000 of the remaining liability collected, as outlined above. The remaining balance will have to be paid through Revpay in myAccount.

Revenue confirmed that a BIK charge will not apply to payments made by an employer on behalf of an employee in respect of their 2020 tax liability arising due to the TWSS. Employers will not be entitled to a deduction under section 81(2)(a) TCA 1997 for these payments.

Filing an income tax return

Where an employee wishes to claim additional credits, reliefs or expenses, such as health expenses they will need to complete an income tax return for 2020. Revenue is encouraging taxpayers in receipt of TWSS payments and the PUP to complete an income tax return. A taxpayer in receipt of PAYE income is generally not considered a taxable person where they are not a proprietary director and can file a Form 12 if they are seeking additional relief.

Useful resources

Revenue included videos on their website on the below list of topics:

  • Employment Detail Summary 2020
  • Employment Detail Summary with Pandemic Payment
  • How to get your 2020 Statement of Liability
  • How to get your 2020 Statement of Liability where you received Pandemic Payments
  • myAccount.

The Revenue webpage 2020 End of year communication for employers and employees also provides additional information on the process.