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If you received a Covid wage support in 2020, you'll find out today how much income tax you owe

Preliminary statements of tax liability for 2020 will be available to PAYE workers today.

Image: Shutterstock/Bianca Grueneberg

THOUSANDS OF PAYE workers who received one of the government’s emergency Covid-19 income supports last year will today find out how much income tax they owe for 2020.

Preliminary statements of tax liability will be available to PAYE workers through the MyAccount portal on the website from today.

They will be particularly relevant to anyone whose income was supported at any stage last year through either the Temporary Wage Subsidy Scheme or the Pandemic Unemployment Payment.

These payments were not taxed at source.

But the government confirmed at the outset that they are subject to normal income tax and Universal Social Charge deductions.

Today, workers who received a payment under either scheme will be able to assess their tax position for 2020 before tax credits and other deductions are applied.

PAYE employees will then have to fill out an income tax return form, which will be “pre-populated” with the information from the preliminary statement, the Revenue Commissioners confirmed last week.

“This pre-population makes it quicker and easier for taxpayers to complete returns and minimises the possibility of errors and omissions,” a spokesperson said.

After that, a final statement of liability will be available, setting out the employee’s true tax position for 2020.

Any liabilities can be settled immediately through the ‘Payments/Repayments’ facility in MyAccount.

Alternatively, the Revenue Commissioners can gradually deduct the money by adjusting your tax credits over a period of four years starting from 2022.

‘Financial difficulties’

Statistics released by the Revenue this morning reveal that around 600,000 or 27% of all PAYE workers had underpaid tax and/or USC in 2020.

Of that 600,000, about 400,000 or two-thirds had received a Covid payment.

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Declan Rigney, head of Revenue’s Personal Division, acknowledged that 2020 had been “a difficult year” for many employees.

But he said the statistics show that over 80% of all PAYE workers have a preliminary end of year tax position “that is either balanced, overpaid or underpaid by less than €200.

“Given that Revenue has confirmed that it will collect any tax owing, interest-free, over a four-year period, this equates to a collection of €1 extra in tax per week for those with an underpayment of €200. The provisional data also indicates that over 706,000 taxpayers are in a refund position.

“For those PAYE taxpayers that were in receipt of one or more of the wage supports during 2020, about 47% are either due a refund or have no additional liability; a further 23% have an additional tax liability of less than €500 and a further 15% have an additional tax liability of between €500 and €1,000.

“Revenue is very aware that underpayments could cause financial difficulties for some people and wish to reassure these taxpayers that collection will not start until January 2022, one year from now,” he said. 

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