More than 400,000 PAYE workers face tax bills on Friday for payments they received under Covid wage subsidy schemes.
Revenue announced late on Thursday that 27 per cent of all PAYE taxpayers – more than 600,000 people – had underpaid income tax or the universal social charge in 2020. However, one third of those do not relate to Covid payments as they have not received any pandemic wage support.
The amount outstanding is €458 million. PAYE workers will have four years from the start of next year to pay back any tax outstanding without incurring interest charges.
PAYE workers are unused to income-related tax bills, as any tax owing is usually deducted at source by their employers. However, no deductions were made from Covid wage subsidies at the instruction of the Government. That left hundreds of thousands of workers owing tax at the end of the year.
They will find out how much that bill is on preliminary end-of-year statements that will be available online from Friday on individuals’ Revenue MyAccount pages.
Revenue said another 706,000 people – about 30 per cent of all PAYE taxpayers – had overpaid during the year and would get refunds totalling €436 million.
A further one million employees are in a “balanced” position, meaning they neither owe money nor are due a refund.
Revenue noted that the statements issued are based on information on record, including earnings, tax deducted at source, payments under the temporary wage subsidy scheme and/or pandemic unemployment payments received from the Department of Social Protection.
"Revenue understands that 2020 was a difficult year for many employees," Declan Rigny, the head of Revenue's personal division, said.
He said the end-of-year statements would bring a level of visibility, assurance and certainty to those who were concerned about their position.
About 165,000 workers would face a tax bill of less than €200, Mr Rigny said.
He said that 23 per cent of those who received a Covid wage support during the year would owe less than €500, with a further 15 per cent owing between €500 and €1,000.
With close to half of those in receipt of Covid payments owing no tax (or even being due a refund), that means around one in six of those who got payments will owe more than €1,000 in tax and universal social charge.
“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,” Mr Rigny said.
People who have yet to submit returns to Revenue claiming for health expenses, nursing home fees, college fees and additional voluntary pension contributions could yet erase any bill outstanding or even find themselves due a refund when they file a return, Revenue said
Mr Rigny also said that about 5,600 employers had not returned details on wage subsidy payments made to approximately 50,000 employees. These workers could yet find themselves owing tax on those payments.