4 in 10 workers remain unaware of their TWSS tax bill

Almost 40% of workers are unaware that they may be facing a tax bill arising from being put on TWSS payments during the pandemic, while more than half (53%) haven’t checked whether or not they have an outstanding tax liability as a result of receiving the payment.

These are among the primary findings of the most recent Taxback.com Taxpayer Sentiment Survey Series, which looked at the COVID income support introduced by the Government las year which has now given rise to tax bills for thousands of workers throughout the country.

The tax refund specialists surveyed over 1,500 taxpayers from their customer database throughout the country. The findings show that there is still a significant scarcity of information and awareness among workers who have been placed on the scheme by employers over the last 12 months, as to their resulting tax position and liability.

The Taxback.com survey asked respondents who received the COVID-19 payment (Temporary Wage Subsidy Scheme - TWSS):

Are you aware that you may now owe extra tax as a result?

• I didn’t know that I might owe extra tax 37%
• I know that I might owe extra tax 58%
• I owe extra tax, but my employer is going to pay it for me 5%

Marian Ryan, Consumer Tax Manager with Taxback.com, commented of the findings,

We are concerned at the high number of TWSS recipients (37%) out there who still seem to be unaware that they may now owe Revenue money. Even of those taxpayers who are aware they might have a tax bill most have yet to check, with many of them saying it’s not simple because they don’t know where to find out this information (41%), while the remainder simply don’t want to know – this burying your head in the sand approach to financial affairs is concerning and is never in a person’s best interests.

The Taxback.com survey also reveals that as many as 95% of TWSS workers are likely to have to pay any outstanding tax bills themselves.

Ms. Ryan continued,

Last year we conducted analysis to get an idea of how much people could expect to pay and concluded that workers could be hit with a tax bill anywhere up to €2,828[1]. This is a definite sting in the tail for workers who, although they didn’t receive any increased income, are now lumped with an additional tax liability as a result of receiving the payment. It is perhaps unsurprising that when asked – the majority of respondents (including those who didn’t receive the payment) believe that the Government should write off these tax bills.

Survey Respondents were asked: The Temporary Wage Subsidy Scheme was put in place last year to help struggling businesses. The employees who received these payments didn’t receive an increase in take-home pay, but may have to pay an additional tax bill as a result. Who do you think should pay the outstanding amounts to Revenue?

• The employee should pay the tax 18%                                  
• The employer should pay the tax 21%
• I feel the Government should write off these bills 61%

Ms. Ryan commented,

The least amount of support was for employees to pay the arising tax themselves, at just 18%. There is a case to be made for employers to pay this tax, but the fact is that many of them are simply not in a financial position to do this. Our experience is that they do want to help their employees and are looking for ways to do so – but after a very tough year, the financially capacity is simply not there.

One thing is certain however, is that there is huge support for the Government to write off these tax liabilities with 61% of employees believing that they should do so. And particularly so where employers are being faced with having to pass the burden on to employees due to insufficient resources to pay them. Perhaps people recognise a sense of unfairness in expecting employees to foot the bill when they really got no additional benefit – there was no extra income for employees as a result of their employer being part of the scheme.”

The survey also questioned how well employees understood their tax position as a result of being on the TWSS.

Some employees were put on the COVID-19 payment (TWSS) system last year by their employer and may now be worried about owing more tax now as a result. Do you fully understand your tax position as a result of being on this scheme?

  • I was put on the scheme and I have checked to see if I have an outstanding tax bill       47%
  • I was put on the scheme and I haven’t checked to see if I have an outstanding tax bill, because I don’t know how to access this information 41%
  • I was put on the scheme – I haven’t checked to see if I have an outstanding tax bill, because I don’t want to know 12%

Ms. Ryan continued,

More than half of respondents (53%) haven’t checked whether or not they have an outstanding tax liability as a result of receiving the payment – most (41%) of these workers say it’s simply because they don’t know how to access this information. We must empower our workers with knowledge and know-how. It’s only fair that they be given the tools to manage their finances and it’s understandable that many people simply don’t know where to go for this. An increasing number of employers are supporting their employees with subsidised access to tax and other financial advice.

These employers recognise that employee wellbeing is paramount and it’s a reality that financial wellbeing has a big role to play in most people’s lives when it comes to their mental health.

These tax liabilities will be collected over the next few years by Revenue and it will come as an unwelcome shock to many to see their tax credits reduce in the coming years. At least if they are armed with this knowledge in advance, they can plan accordingly.”

Article Published: 08/06/2021