Workers face tax bill at year’s end
Employees on the new Temporary Wage Subsidy Scheme have been warned they may face a tax bill at the end of the year.
The Government announced new measures to provide financial support to workers affected by the Covid-19 crisis on March 24 th. As part of these measures, Revenue is operating a Temporary Wage Subsidy Scheme.
The scheme enables employees, whose employers are affected by the pandemic, to receive significant supports directly from their employer through the payroll system.
The subsidy payment is based on up to 70% of the normal net weekly pay for each employee to a maximum of €410*.
Income tax and USC will not be applied to the subsidy payment through the payroll.
According to Padraig Boyle from Boyle Practical Project Management (BPPM),, Galway, employee PRSI will not apply to the subsidy or any top up payment by the employer.
“Income tax, USC, and PRSI are not deducted from the Temporary Wage Subsidy.
“However, the Subsidy will be liable to Income Tax and USC on review at the end of the year.
“Because of this anyone in receipt of a top up payment and the subsidy and remains in employment to the end of 2020 will have underpaid PAYE and USC and will be due to repay this to the Revenue Commissioners.
“The methods by which the Revenue Commissioners will recoup these monies will be reviewed at the end of the year.
“This situation is causing concern for those in receipt of this Wage Subsidy as they may not know how to calculate their underpayment.
“In 2019 I checked the internet for an interactive converter that would calculate net pay for a person in a given pay period for a given taxable pay for that pay period.
“As there was nothing on the web that does this properly I developed an application.
“This gross to net pay calculator calculates tax (PAYE), pay related social insurance (PRSI), universal social charge (USC) for any given period.
“The converter has been tested extensively on a couple of payrolls and works perfectly in 97% of cases.
“There are exceptional cases such as where people are on Emergency Tax for prolonged periods or have changed employments in the period being calculated etc. that the converter will not calculate net pay the same as the employer as it does not have the figures.
“In order for anyone in receipt of a top up payment and the subsidy and remains in employment to the end of 2020 to use the gross pay to net pay calculator the PAYE and USC there is just one item to remember that is different from the norm for using the calculator. That is to determine taxable pay the subsidy and the top up payment must be added together.
“Simply enter in the data as requested and note the difference between what you actually paid in Tax and USC as to what you should have paid as per the gross pay to net pay calculator.
“None of the data is stored as this is an interactive application and the data is cleared when you exit the page. No personal Masterfile information is required to complete this exercise.
“The gross pay to net pay calculator 2020 is available free to access from my website BPPM at Payroll_Management/ Gross_to_Net_Calculator/gross_pay_ to_net_pay_calculator_2020
“This application is available for calculating net pay from gross on mobile tablet, laptop and PC.
There are no preconditions to access this application and it can be accessed on any device at any time to make calculations.”