That’s the message from the experts this week as thousands of taxpayers throughout the country receive notification from Revenue that their Preliminary End of Year Statement is now available this Friday, January 15th.
At least 40,000 people in Cork are currently receiving the pandemic unemployment payment (PUP), but many workers will be surprised to learn that they may now have a tax liability as a result of receiving either PUP or the Temporary Wage Subsidy Scheme (TWSS) in 2020.
Taxback.com say the amount people owe will vary vastly depending on a range of actors such as pre-payment income and employer top-ups.
“The notification of the tax liability from Revenue is likely to come as a surprise to many and a shock to others,” said Marian Ryan, Consumer Tax Manager at Taxback.com.
“A lot of PUP and TWSS recipients are simply unaware that these payments will have given rise to a tax liability and even of those who expected it, many will be surprised as to exactly how much they owe. For many more, the news will simply be the source of anxiety for people who are already financially stretched.”
How much could I owe?
The amount people will owe will vary greatly from person to person, depending on their circumstances, their earnings pre and post TWSS and if their employer subsidised the TWSS with additional income and topped up the employee’s gross weekly wage.
“For example, a typical worker on €35,000 who received the TWSS payment which wasn’t topped up by their employer can now expect to owe Revenue approximately €429. If the same employee received the TWSS and their employer topped-up their gross weekly wage, they can now expect to owe approximately €1,334 in PAYE & USC.” said Ms Ryan.
“Similarly, a worker on €67,500 whose income was topped up by their employer to the maximum allowable amount would now expect an underpayment in the region of approximately €2,837.”
It’s not due right away
According to Ms Ryan, the main thing to bear in mind at this point is that Revenue has already said that this tax liability will not fall due this year, or even next year.
“Although the option is available to taxpayers to clear the underpayment, people are not expected to make a lump sum payment. Instead, what will happen is that Revenue will reduce a person’s tax credits over a period of between two to four years, commencing in 2022”.
What to do next: 5 steps
Taxback.com say that anyone who receives a notification of a liability from Revenue should consider the following 5 steps:
- Do not panic – bear in mind that these monies will not have to be paid right away.
- Do not to be alarmed at the amount owed – the Preliminary End of Year Statement will not include all tax credits and expenses that a person may be entitled to, so the amount owed could well be lower – or some people may even be due a refund.
- If you have concerns or want to address this bill, then log on to MyAccount portal to go through your reliefs and refunds eligibility. If it all seems too convoluted or time-consuming, then engage an expert to give you the advice you need and walk you through what you need to do
- Use this as an opportunity to get your tax affairs in order. Most PAYE taxpayers never apply for all the refunds they are owed, and of those who do, many are unlikely to do so every year. You can claim as far back as four years, so there are tens of thousands of workers out there to whom the Revenue actually owe money.
- Find out if your employer is in a position to cover any of the liability. This is absolutely not an option for everyone. Employers all over the country are struggling financially as it is. But some employers, albeit a small number, might be in a position to cover some of the costs.