Today, PAYE workers who last year received the government’s emergency COVID-19 PUP will discover the income tax they owe for this year. PAYE workers will today be able to access preliminary statements of tax liability through the MyAccount portal on the Revenue site before tax credits and other deductions are applied.
Any person who was in receipt of the income support through either the Temporary Wage Subsidy Scheme or the government’s PUP will be affected. Although these payments were not taxed at source, they are subject to normal income tax and Universal Social Charge deductions.
The Revenue Commissioners confirmed last week that PAYE employees are required to complete a “pre-populated” income tax return form, with information from the preliminary statement. A spokesperson said pre-populated forms makes it “quicker and easier for taxpayers to complete returns and minimises the possibility of errors and omissions”.
Once complete, a final statement of liability will display the employee’s full tax position for 2020. The ‘Payments/Repayments’ section in MyAccount will help employees immediately settle any liabilities. Alternatively, the Revenue Commissioners can gradually deduct the money by adjusting your tax credits over a period of four years, starting from 2022.
Around 600,000, or 27% of all PAYE workers had underpaid tax and/or USC in 2020, according to figures released by the Revenue. Of those 600,000, about 400,000, or two-thirds had received a COVID payment.
2020 had been a difficult year for many employees and it has been acknowledged by Head of Revenue’s Personal Division, Declan Rigney. However, he explains that statistics show over 80% of all PAYE workers have an imbalanced preliminary end of year tax position.
“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”.