Gerald Nash (Louth, Labour)
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65. To ask the Minister for Finance his views on a recent study (details supplied) which suggests that 86% of workers who received the temporary wage subsidy scheme are now faced with a tax liability and that 75% of those who received the pandemic unemployment payment are faced with a tax liability; the number of persons who availed of the temporary wage subsidy scheme and pandemic unemployment payment, respectively who have faced a tax liability associated with these schemes; and if he will make a statement on the matter. [44844/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Temporary Wage Subsidy Scheme (TWSS) was introduced on 26 March 2020. It was legislated for in Section 28 of the Emergency Measure in the Public Interest (Covid-19) Act 2020 and was an emergency measure to deal with the impact of the Covid-19 pandemic on the economy. The TWSS was also intended to facilitate the retention of the employer/employee relationship thereby supporting the early recommencement of normal business when conditions allowed. The scheme operated until 31 August 2020 and was replaced by the Employment Wage Subsidy Scheme (EWSS) from 1 September 2020.

To ensure TWSS payments were made as quickly as possible to employees at the outset of the pandemic, income tax and the Universal Social Charge (USC) liabilities for 2020 were not taxed in the normal ‘real-time’ manner through the PAYE system and were instead calculated at the end of the year. These liabilities may be collected interest free over four years from 1 January 2022 by reducing employees’ tax credits. The EWSS restored the normal ‘real-time’ arrangements for PAYE with deductions made as employees are paid.

The Pandemic Unemployment Payment (PUP) which was legislated for in Finance Act 2020 is a social welfare payment for workers who became unemployed due to the COVID-19 pandemic. PUP payments are classified in legislation as income supports and as such are subject to income tax but are exempt from USC and Pay Related Social Insurance (PRSI). The standard mechanism to tax Department of Social Protection (DSP) payments is by reducing the recipient’s tax credits and rate bands and collect the liability through the PAYE system. However, like the TWSS, the PUP was not taxed in ‘real-time’ in 2020 and was instead calculated at the end of the year and may also be paid, interest free, over four years from 1 January 2022 by reducing employees’ tax credits.

Revenue published statistics in January 2021 on the preliminary end of year tax position for all PAYE taxpayers for 2020, which can be found on Revenue's website at the following link -

The statistics show that across the entire PAYE case base of over 2.3 million taxpayer units, including those in receipt of TWSS and/or PUP subsidy payments, over 80% had a preliminary end of year tax position that was either balanced, overpaid, or underpaid by less than €200.

The statistics also show that, for PAYE taxpayers that were in receipt of the TWSS only during 2020, 29% (79,800) were either due a refund or had no additional tax liability, while 71% (198,400) had an additional tax liability.

For PAYE taxpayers in receipt of the PUP only during 2020, 67% (203,900) were either due a refund or had no additional tax liability, while 33% (99,700) had an additional tax liability.

For PAYE taxpayers that received both TWSS and PUP in 2020, 42% (86,900) were either due a refund or had no additional tax liability, while 58% (112,500) had an additional tax liability.

Overall, for PAYE taxpayers that were in receipt of one or more of the supports (TWSS/PUP) during 2020, about 47% were either due a refund or had no additional tax liability, 23% had an additional tax liability of less than €500, 15% had an additional tax liability of between €500 and €1,000 and 15% had an additional tax liability greater than €1000.

Any liabilities owed could be reduced or eliminated by offsetting additional tax credits due, for example qualifying health expenses. These additional credits could be claimed by employees when completing their 2020 income tax return. As already advised, where a liability still exists after all additional tax credits are offset, the amount due can be collected, interest free, over four years from 1 January 2022, by reducing tax credits. For example, an underpayment of €200 will be collected over the four years at a rate of €1 per week.

Finally, I am aware that Revenue will facilitate the payment of TWSS related tax liabilities by employers who wish to do so on behalf of their employees. This includes the non-application of Benefit in Kind rules to payments made before the end of September 2021.