Louise O'Reilly (Dublin Fingal, Sinn Fein)
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362. To ask the Minister for Finance if the interest penalty for tax warehousing for self-employed persons will be deferred until 2022. [31383/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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Finance Act 2020 legislated for warehousing of certain liabilities of self-assessed income taxpayers, including the self-employed, whose income has been affected by the restrictions introduced to combat Covid-19. For the self-employed, the liabilities that may be warehoused (“Covid-19 income tax”) are the balance of self-assessed income tax, PRSI and USC for 2019 and preliminary tax, PRSI and USC for 2020, which were due to be paid on or before 31 October 2020, or 10 December 2020 where the individual filed electronically through ROS (“Period 1”); and, in certain circumstances, the balance of self-assessed income tax, PRSI and USC for 2020 and preliminary tax, PRSI and USC for 2021, which are due to be paid on or before 31 October 2021, or 17 November 2021 if filed electronically.

The legislation currently provides that “Covid-19 income tax” will be subject to no interest for a period of 12 months and 3% interest per annum thereafter until the liability is paid in full. Where an individual is eligible to warehouse the balance of 2020 income tax, PRSI and USC and preliminary income tax, PRSI and USC for 2021, s/he can avail of 0% interest on the warehoused amounts for an additional 12 months.

As part of the Economic Recovery Plan announced by the Government on 1 June, the debt warehousing scheme will be extended to the end of 2021 for all eligible taxpayers. As a result, self-assessed income taxpayers who warehoused the balance of income tax for 2019 and preliminary tax 2020 will have an additional period of over 12 months, up to 31 December 2022, during which no repayment of the warehoused liabilities is required and no interest will accrue on those liabilities. Such taxpayers will not be required to repay these liabilities until January 2023. Interest at a reduced rate of c. 3% per annum will apply from that date.

Where a self-assessed taxpayer is eligible to warehouse the balance of income tax for 2020 and preliminary tax 2021 (the liabilities due to be paid in October / November 2021), the extension will also suspend collection of these liabilities, interest-free, until 31 December 2022.

Some self-employed taxpayers may be availing of the other warehousing schemes. A similar extension is also proposed for the warehousing schemes for PAYE (Employer) liabilities, VAT and excess Temporary Wage Subsidy Scheme (TWSS) payments. Currently, the liabilities that can be warehoused are those relating to “Period 1”, the period in which the ability of a business to trade was restricted due to the impact of Covid-19. The proposed extension of the scheme will allow business to warehouse additional liabilities for periods up to and including December 2021. Collection of these liabilities will be suspended, interest-free, until 31 December 2022. Repayments will commence with effect from 1 January 2023, at a reduced interest rate of c. 3% per annum.