Temporary Wage Subsidy Scheme (TWSS) – Employee Tax Liabilities
Paying the income tax and USC:
Options to pay the income tax and USC arising on the TWSS payment include:
- Adjustment to the employee tax credits and rate bands over a 4-year period beginning in 2022
- The employee may pay the full amount due to revenue in one payment
- The employer may pay the tax liabilities on behalf of the employee
Employers paying the TWSS tax liability
Employers can pay employees’ TWSS tax liabilities without an additional tax charge. Revenue have confirmed that no Benefit in Kind (BIK) and therefore no additional tax charge will arise for the employee where the employer pays the income tax and USC arising on the TWSS payments.
- The Preliminary End of Year Statement for 2020 may assist an employer in determining the amount of income tax and USC due. The statement will issue to the employee via MyAccount, not the employer. The employer will have to verify the tax liability amount with the employee.
- Documentary evidence must be retained by the employer to demonstrate that they have engagement with their employees on this arrangement and have agreed to pay the income tax and USC on TWSS payments.
- Employers must engage directly with employees and agree the method to pay the liability involved.
- The concession is only available with respect to payments made by employers on behalf of their employees up to the end of June 2021.
- Employers paying amounts to settle the employee’s tax liability will not receive a deduction with respect to Corporation Tax as these payments would not be regarded as wholly and exclusively incurred for the purposes of the employer’s trade or profession.
The tax liability arising can be paid by either of the following methods:
- Payment direct to Employee
A payment can be made by the employer directly to the employee with respect to the TWSS tax liability due. The employee must then pay their liability via RevPay.
or
- Amend final payroll submission of 2020
The last payroll submission of 2020 may be amended by the employer such to include additional ‘income tax paid’ and ‘USC paid’ that equals the liability shown on the Preliminary End of Year Statement.
The employer will then need to pay the additional amounts that are notified via a revised monthly Statement issued by 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 the employer.
