PAYE Preliminary End of Year Statements for 2020 – Have you additional tax to pay for 2020 as a result of receiving a payment under the governments Covid 19 income support schemes?
Last Friday the Revenue Commissioners issued preliminary end of year statements for 2020 to all PAYE workers. The end of year statement provides employees with a preliminary calculation of their income tax and USC position for 2020 and indicates whether their tax position is balanced, underpaid or overpaid for the year. Employees can now view their statements through Revenue’s MyAccount platform.
If you received the Pandemic Unemployment Payment (PUP) during 2020 or if your wages were subsided through the Temporary Wage Subsidy Scheme (TWSS) then you may have additional tax to pay as both the PUP and TWSS are taxable. The preliminary end of year statement issued by Revenue will confirm the position and quantify any additional tax due for 2020.
How do I pay back my tax liability for 2020?
Employees
The Revenue Commissioners have acknowledged that 2020 was a difficult year for many employees and have outlined that where a tax underpayment arises, employees will not have to repay this amount straight away. The collection of any underpayment will not start until January 2022 and will be spread over 4 years without the application of interest. The employee’s tax credits will be reduced accordingly over the four year period in order to recoup the amount of tax due.
The preliminary end of year statement issued by Revenue does not take into account any further tax relief which may be due e.g. for qualifying medical/dental expenses or the stay and spend tax credit. In order to finalise their position for 2020, employees can submit an income tax return online through MyAccount. The return is pre-populated with the information Revenue already has on record for the taxpayer. An updated statement will then issue to the employee once the return has been submitted.
Employee who do not want to avail of the above extension can choose to pay the liability in full through the MyAccount facility. Revenue have also advised that PAYE taxpayers who have underpaid tax in 2020 but did not receive any wage supports are also eligible to avail of the tax repayment extension.
Self-Assessed Individuals
End of year statements have not issued to taxpayers registered for self-assessment income tax (i.e. those taxpayers who submit an annual Form 11 or Form 12) or to jointly assessed spouses/civil partners where one or both are registered for self-assessment income tax.
Where such individuals were in receipt of PUP or TWSS payments in 2020, such details must be included on their 2020 income tax return and any additional tax due will then be factored into their 2020 income tax liability.
We would encourage self-assessed taxpayers to consider preparing their 2020 income tax return as early as possible so that they have visibility on their 2020 tax liability well in advance of the pay & file deadline allowing sufficient planning time to gather any required funds.
How can we help?
Please contact out tax team with any enquiries relating to the above or any other taxation matter.