COVID-19 – Updates on Payroll Related Information
This article is to highlight changes to the COVID-19 Payroll information that we originally published on the 23/03/2020 – see COVID 19 – Payroll Related, Coronavirus Information.
As this is a rapidly changing area we advise you to revisit this article on a regular basis to keep up to date with the information in it and the related linked articles from Government, Revenue and Sage.
To assist you with this, we have highlighted below the most recent updates that we think are important.
Wage Subsidy Scheme
Introduction of the “Employment Wage Support Scheme” (EWSS) – July 2020
The Employment Wage Support Scheme (EWSS) was announced on the 23rd of July 2020. it replaces the Temporary Wage Subsidy Scheme (TWSS) from the 1st of September 2020 and is expected to be in place until the 31st of March 2021. Both schemes will run in parallel until the end of August 2020 when the TWSS ends. The main features are:
- Employers can qualify if they can demonstrate that turnover or orders reduced by 30% or more between 01/07/2020 and 31/12/2020 compared to the same period in 2019 and that this was due to disruption caused by COVID-19.
- Employers must review this qualification each month to ensure eligibility.
- There are exclusions for certain categories of employers.
- Administered by Revenue on a “self-assessment” basis.
- Subsidy support levels:
- Gross weekly wage less than €151.50 = Nil
- Gross weekly wage from €151.50 to €2202.99 = €151.50
- Gross weekly wage from €203 to €1,462 = €203
- Gross weekly wage over €1462 = Nil
Sage has released an update to their Payroll software to support this, for more details, see our article –> Processing the Employment Wage Subsidy Scheme (EWSS) in Sage Payroll
You can also get more information from Revenue here –> https://www.revenue.ie/en/corporate/communications/covid19/employment-wage-subsidy-scheme.aspx
April 2020 Updates
Since the Revenue first issued their guide on their “Temporary Wage Subsidy Scheme” on the 26th March 2020, they have continued to add sections to it to bring clarity to certain topics. Queries to them via phone or ‘My Enquiries’ shine a light on certain topics which may need more detail, so it’s likely that they may continue to add clarity/detail to more topics in the near future. Since its original version, it has had 4 revisions.
We have supplied the link to Revenues Operational guide at the bottom of this article. We would advise you to save the link, and check back on it on a daily basis, in order to keep yourself up to date with any new particulars.
Below are examples of items which they recently added some clarity.
[Section 1.6 – What is an additional taxable payment under the Temporary Wage Subsidy Scheme?]
“Sometimes referred to as ‘top-up payments’, an employer can choose to make an additional payment to the employee to fully or partially make up the difference between the amount provided by the subsidy scheme and the employee’s Average Net Weekly Pay. Such additional payments, which cannot be regrossed, are regarded as gross pay and liable to Income Tax and USC. If the employer makes an additional payment greater than the difference allowed by the scheme (i.e. the employee receives more than the Average Net Weekly Pay) then the subsidy value refundable to the employer will be reduced by this excess amount when the refund reconciliation is performed by Revenue in due course.”
[4.4.2. Example 2 – Impact of Additional Payment on Subsidy:]
“An employee is paid weekly and has an Average Net Weekly Pay of €550 (A). As the employee’s Average Net Weekly Pay is less than €586, the maximum weekly wage subsidy allowable for this employee is €385 (B), which is 70% of their Average Net Weekly Pay. The maximum additional payment an employer can make, to receive the full subsidy, is €165 (C), being the difference between the employees Average Net Weekly Pay €550 (A) and their maximum weekly wage subsidy €385(B).
In this example, the employer can make an additional payment up to value of €165 (C) and receive the full subsidy (see i below) for this employee, however if the employer’s additional payment exceeds this value then the subsidy must be reduced by the value of the excess (see ii below). This reduction may not be applied automatically by all payroll software packages. Where applicable, Revenue will apply subsidy reduction when calculating the subsidy refund that the employer will receive. In the transitional phase, this will be reflected in the balance payment due to be refunded to Revenue in the future (G).”
[3.11 – Is the wage subsidy taxable on the employee?]
“The payments are liable to income tax; however, the subsidy is not taxable in real-time through the PAYE system during the period of the Subsidy scheme. Instead the employee will be liable for tax on the subsidy amount paid to them by their employer by way of review at the end of the year. When an end of the year review takes place, it may be the case that an employee’s unused tax credits will cover any further liability that may arise. Where this is not the case, and should an Income Tax liability arise, it is normal Revenue practice to collect any tax owing in manageable amounts by reducing an individual’s tax credits for a future year(s) in order to minimise any hardship. Additionally, if an individual has any additional tax credits to claim, for example health expenses, this will also reduce any tax that may be owing.”