TWSS – Taxation of payments received by employees

Sep 28, 2020

Revenue recently set out details of the taxation of payments received under the TWSS and the Pandemic Unemployment Payment (PUP). Employees will be given the opportunity to pay their income tax and USC liability in full or partially, or through the reduction of their employee tax credits over four years.

In a press release issued last Friday, Revenue confirmed that payments received under the TWSS and PUP, which were not taxed in real-time, will be addressed through a Preliminary End of Year Statement. Revenue will provide all employees under the schemes with the pre-populated statement showing the amounts of TWSS and/or PUP payments received per Revenue records and a calculation of the tax position for 2020.

Employees will have the opportunity to update their personal record, declare any additional income and claim additional tax credits that may be due, such as qualifying health expenses, to calculate their final liability.

In a commitment to minimising any hardship for employees Revenue 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 employees tax credits over 4 years to minimise any hardship. The reduction of tax credits will start in January 2022.”

Revenue regularly update the FAQ on: Guidance for PAYE Employees whose Employers have been affected by the COVID-19 Pandemic and are availing of the TWSS, which may assist with employee queries.