Revenue is independent in the exercise of its functions and I have no plans to engage with Revenue as proposed in the Deputy's question.
Payments made under the Temporary Wage Subsidy Scheme (TWSS) and the Pandemic Unemployment Payment (PUP) are regarded as income supports and share the characteristics of income. As such the TWSS is liable to both income tax and Universal Social Charge (USC) while the PUP is liable to income tax only, reflecting the standard approach to the taxation of social welfare type payments.
For 2020, both the TWSS and PUP were taxed at year end rather than in the normal ‘real-time’ manner due to the urgent requirement to get payments to people as quickly as possible. The TWSS was replaced by the Employment Wage Subsidy Scheme (EWSS) from 1 September 2020, which re-established the normal requirement for employers to operate ‘real-time’ PAYE/PRSI and USC deductions. The continuation of the PUP into 2021 has also re-established the practice of operating PAYE (income tax only) in ‘real-time’ for that scheme. However, people receiving PUP payments in 2021 will only pay tax when they return to work.
I am advised by Revenue that any income tax or Universal Social Charge (USC) liabilities arising in respect of the TWSS or PUP in 2020 need not be paid as a single sum and can instead be paid, interest free, over four years from 1 January 2022, by reducing the relevant employee’s tax credits. This arrangement was put in place to ensure any financial hardship in respect of these liabilities are minimised to the greatest extent possible. This situation does not arise in 2021 because of the re-establishment of the normal ‘real-time’ deduction arrangements.
Revenue has also assured me that any persons still experiencing financial difficulties arising from the taxing obligations in respect of the TWSS and PUP can make direct contact to discuss their specific circumstances and every effort will be made to assist them.
Finally, in relation to the proposal related to enhanced tax credits, questions of equity arise. Other income earners in receipt of comparable “normal wages” are taxable on those wages and, in the interest of equity, the pandemic income support payments are subject to income tax. I have no plans to change that.
