150,000 face tax bill of over €1k for pandemic supports
TENS of thousands of people face tax bills of over €1,000 for their pandemic dole payments, a study has found.
Almost nine in ten employees who received the Temporary Wage Support Scheme payment for some period over the course of the pandemic, and whose income was topped up by their employer, now have a substantial outstanding tax liability from 2020.
At the height of lockdown there were 591,000 people on the payments, but that levelled out to just over 500,000 for months by the end of last year.
A study of 500 employees by Taxback.com reveals up to 29% of them could have underpaid tax by up to €1,000.
If the figure from Taxback’s study was applied to the total number on the payments it would mean around 150,000 face large Revenue bills.
Taxback.com’s Marian Ryan warned: ‘The reality of it is that most will have a tax liability. The average salary of those who took part in the review was about €46,000.
‘The subsequent tax bills are testament to our contention that it’s middle-income earners who will be hardest hit by these taxes.
‘These reviews reveal the extent to which the Covid support payments will impact the tax position of workers.
‘However, most of the employees we have worked with to date have been able to offset some, if not all, of the monies outstanding with tax refunds that they were, in fact, due to them – but that people simply were not aware of,’ Ms Ryan added.
Its study of 500 employees who received Covid support payments found tax underpayments in the more than three in four cases where the employee had been put on either the TWSS or Pandemic Unemployment Payment.
Some 65% of these workers owed the Revenue more than €500, while 29% of those had an outstanding tax bill of over €1,000.
When the 29% figure is applied to the total number of participants in the scheme it would mean around 150,000 people will be liable to pay tax of over €1,000. Revenue has previously said it will give people time to pay when collecting any tax owed.
The pandemic has pushed Government debt to over €230.5billion, which is more than €46,000 per person in the State.
In a review of the first 500 employees to partake in Taxback.com’s new Employee Financial Wellbeing service, the tax refund specialists found a tax underpayment arose in 75% of cases where the employees had received the PUP in 2020, and 86% of cases where the employee had been put on the TWSS.
Some employers only used the TWSS for a short time and have since paid back the subsidy to the Revenue Commissioners, so, their employees have actually ended up in a refund position.
The average refund in these cases was €635, with some employees receiving a refund of more than €6,000. Some 5% of the 500 employees availing of the review were in receipt of the €3.20 per day tax free from their employer to cover their cost for working from home. Over 31% of people claimed a flat rate expense refund, while 28% of people claimed a medical expenses refund.
Average refund was €635