News & Events

Here’s everything you need to know about employees’ 2020 tax liabilities:

Revenue will now enable employers who wish to pay some or all of the employees’ 2020 tax liabilities. This applies to Income Tax (IT) and Universal Social Charge (USC) liabilities which arise due to the wage subsidy scheme (TWSS).

In order to avail of this support employers must engage directly with employees and agree on the value and method to pay the liability involved. In January 2021, Revenue made a Preliminary End of Year Statement for 2020 available for each employee. This will help in determining the amount of IT and USC due.

All employees, including those who benefited from the TWSS, can now view their Preliminary End of Year Statement in MyAccount on the Revenue online site. Each employee will be able to see if there is an underpayment of IT or USC arising due to the TWSS.

Deadline:

Initially this facility was limited to payments made by employers on behalf of their employees up to end June 2021. The concession is now extended to run until the end of September 2021. This will ensure employers have all the information available following the TWSS Reconciliation process.

How can you pay your employees’ tax liabilities?

If you would like to pay these tax liabilities, then you can do so using one of the following methods:

1.Provide funds to each employee in order to meet their IT and USC liabilities. This will be identifiable in the Preliminary End of Year Statement. Each employee must then pay their liability via their own My Account on the Revenue site.

2. Alternatively, you can amend your last payroll submission of 2020. You must add additional IT ‘paid’ and USC ‘paid’ values that equal the amount of tax liability you are paying on behalf of your employee from the Preliminary End of Year Statement. It is vital to note that this must be done for each employee concerned. Some payroll packages do not provide this facility and it may be necessary to enter the information manually via the Revenue Online Service.

You also need to pay the additional amounts that are notified via a revised monthly statement by the Revenue.

The employee’s Preliminary End of Year Statement will be recalculated subsequently. This will show the additional IT and USC liabilities paid directly by you.

In order to avail of both of the above options, each employee must complete their 2020 Income Tax Return.

Documentation:

You must retain copies of any documentation and records covering your:

· Agreement to undertake these payment arrangements.

· Engagement with your employees about these arrangements.

Additional factors to note: Revenue will not apply Benefit-in-kind rules to these payments you make on behalf of your employees.

The Benefit in Kind (BIK) concession also applies where an employer pays the TWSS related tax and USC liabilities of an employee who is:

· A self-assessed taxpayer or

· Is joint assessed, and his or her spouse is self-assessed.

The BIK concession also apples where an employer pays the TWSS related tax and USC liabilities of a proprietary director(s) in the company. This is provided that the employer pays the TWSS related liabilities of all employees in the company.

Revenue previously advised that certain employees may not have received their full entitlement under the TWSS and are due additional payments. These payments are known as Direct Temporary Wage Subsidy (DTWS) refunds.

Any employee who is due to receive a DTWS refund will have that amount offset against their TWSS liabilities. The resulting balance, on their Statement of Liability, is the net amount due to Revenue. This is the amount that a person’s employer may wish to pay on their employee’s behalf to Revenue.

To read more on further clarifications please visit the Revenue online site here: https://www.revenue.ie/en/employing-people/twss/employers/index.aspx

If you have any further questions on the new updates regarding this government support, then Cronin and Co would be happy to assist you. Please contact [email protected]

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