WORKERS ON THE wage subsidy scheme will have to pay a small amount of tax back on it, according to the Revenue Chairman Niall Cody.

Speaking at an announcement of changes to the scheme, he said the tax will be collected from those on the scheme, but not until next year. 

Cody said concerns had been raised in recent weeks in relation to people being hit with tax bills in 2021, but he said: “generally it won’t lead to big tax liabilities at the end of the year”.

Giving an example of someone earning €31,000 and getting the wage subsidy of €350, he said there would be an additional tax liability to be paid of €120 for the year.

“If we collected that in 2021 over the weekly basis it would be an additional liability of €2.32,” he explained.

He said when a PAYE worker underpays their tax, the majority prefer to pay it one go, however, he said it can be stretched out over the year.

Cody added that any tax liability might potentially be offset by tax credits or health expenses claimed. 

“I think there is a lot of people creating problems around the scheme,” he said, stating that it is not necessarily the case that workers will face large tax bills. 

Minister for Finance and Public Expenditure Paschal Donohoe said the government wants workers to be “no worse off nor no better off had they not been on the scheme” but added tax due will have to be looked at next year.

The government has said that in order to ensure speedy payments and minimise hardship on people in the short-term, the temporary wage subsidy scheme is not being taxed at the time at which people receive it.

The wage subsidy payment is liable to income tax, USC and pay-related social insurance, with the amount of tax each worker pays depending on the amount of income they earn, and their personal circumstances. 

The government states that, generally, any tax due will be collected in manageable amounts over the course of the next tax year.