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Wage subsidy scheme recipients who owe income tax won't have to pay it back until next year at the earliest

Paschal Donohoe has previously said that Revenue’s method for recouping the tax will “minismise financial hardship”.

Minister for Finance Paschal Donohoe.
Minister for Finance Paschal Donohoe.
Image: Leah Farrell/Rollingnews.ie

MINISTER FOR FINANCE Paschal Donohoe has said that those who owe tax as a result of being in receipt of the temporary wage subsidy scheme (TWSS) won’t have to repay it until next year.

Speaking on RTÉ Radio 1′s Morning Ireland, the minister said said that any tax owed could be spread over future years.

He added that Revenue will liaise with each employer in relation to this.

The TWSS was introduced in late March to support employers affected by Covid-19. It subsidises the wages of workers up to €410 a week. The government is switching to a new scheme dubbed the Employment Wage Subsidy Scheme (EWSS) from next week which will see the maximum payment per week set at €203 per employee.

To date, over 69,500 employers have registered with the TWSS and over half a million people have received at least one payment on the scheme. 

While workers are liable to pay tax on the income paid to them under the TWSS, they are not being taxed on it week-to-week or month-to-month.

They’ll become liable to repay whatever tax they haven’t paid at the end of this year, with any repayments likely to be spread out over a significant period of time.

Donohoe has previously said that it’s not possible to give an accurate estimate, right now, of how much someone might owe at the end of the year or if they’ll face a tax bill at all. 

There’s a chance there might not a tax bill because a person’s tax credits may offset any potential underpayment at the end of the year. 

The minister has said though that Revenue’s method for recouping what’s owed will “minimise any financial hardship to the greatest extent possible”

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In its pre-Budget submission, the Consultative Committee of Accountancy said that if an employee receives €350 per week for 22 weeks, this would amount to €7,700 in untaxed income that must be dealt with by the employee.

It has called for “definitive guidance” on the matter along with confirmation that “tax on TWSS payments will be collected over four or more years so the employee is not left with a substantial drop in take-home pay in the coming tax years”.

Speaking today, Donohoe said that unpaid tax on the scheme would be collected “over next year and beyond”.

He added that €2.7 billion had been paid to date under the TWSS, and that €2.25 billion will be invested under the new EWSS through to next April. 

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Sean Murray

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