57% of recipients are unaware of the impending future tax liability
Christmas could see unknowing workers hit with a tax bill of up to €2,828.59, in addition to any drop in income they may have suffered during the lockdown. And January could see taxpayers, employers and Revenue scrambling to balance the tax affairs of the over 1 million recipients of the schemes. This is according to Taxback.com, who say that the end of year tax bill, as a result of being on the Temporary Wage Subsidy Scheme(TWSS) or in receipt of COVID Pandemic Unemployment Payment (PUP), is likely to come as a “major shock” to thousands of people throughout the country at the end of the year. The latest Taxback.com Taxpayer Sentiment Survey revealed that more than half (57%) of respondents receiving either payment are not aware that a future tax liability would be building.
Since its introduction in March, over 551,800 employees have been paid by the TWSS, while 517,600 have received the PUP. Taxback.com say that while there can be no doubt that the implementation of these supports was absolutely necessary and has helped thousands of employers and employees alike, the processing of payments fell short in its execution, leaving those in receipt significantly out of pocket by the end of the year.
Implications of TWSS and COVID PUP
Taxback.com released their own analysis of the impact of the TWSS and of the COVID PUP on the salaries of 12 different sample scenarios*,
- Employees earning above €20,000 with no income top-up will see their net incomes drop during the 23weeks by €1,000 up to €22,000 or more.
- Employees with an income top-up from their employers won’t suffer a net income drop in 2020 unless their income is over €44,000 but will face a tax bill of between €300 and €2,829 at year end depending on their income.