COVID-19 information and advice for taxpayers and agents
Temporary COVID-19 Wage Subsidy Scheme
On Tuesday, 24 March the Government announced new measures to provide financial support to workers affected by the Covid-19 crisis. As part of these measures, Revenue operates 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 information that follows is based on the terms of the Emergency Measures in the Public Interest (Covid-19) Act 2020.
The scheme was expected to last 12 weeks from 26 March 2020.
On Wednesday 15 April, the Minister for Finance and Public Expenditure and Reform announced further updates to the Temporary Wage Subsidy Scheme. The changes can be found in the Minister’s formal determination and the revised details are set out below.
On 5 June, the scheme was extended by the Minister for Finance and Public Expenditure and Reform to 31 August 2020. Businesses re-opening, who were not previously registered for the scheme, can now apply to join the scheme, provided they meet the relevant eligibility criteria.
The Temporary Wage Subsidy Scheme will be available to employers who keep employees on the payroll throughout the COVID-19 pandemic, meaning employers can retain links with employees for when business picks up after the crisis. Additionally, the operation of the scheme will reduce the burden on the Department of Employment Affairs and Social Protection (DEASP) which is dealing with the other Covid-19 related payments.
Employers are encouraged to facilitate employees by operating the scheme, by retaining employees on their books and by making best efforts to maintain a significant, or 100% income for the period of the scheme.
Key features of the scheme
- Initially, and until 4 May 2020, the subsidy scheme will refund employers €410 for each qualifying employee.
- From 4 May 2020, the subsidy payment will move to a system based on the previous net weekly pay for each employee. See further information below.
- Employers should pay the relevant subsidy to each employee and may make an additional payment so that the total pay does not exceed the average net weekly pay of the employee.
- The subsidy scheme applies both to employers who make additional payments to their employees and those that are not in a position to do so.
- Employers make this subsidy payment to their employees through their normal payroll process.
- Employers will then be reimbursed for amounts paid to eligible employees and notified to Revenue via the payroll process.
- The reimbursement will, in general, be made within two working days after receipt of the payroll submission.
- Income tax and USC will not be applied to the subsidy payment made through the payroll.
- Employee PRSI will not apply to the subsidy or any additional payment by the employer.
- Employer’s PRSI will not apply to the subsidy and will be reduced from 11.05% to 0.5% on the additional 'top-up' payment from the employer.
- There is no change in the basis of calculation of the subsidy amount for the extended period to 31 August 2020 and the arrangements in place since the start of the Operational Phase on 4 May 2020 continue.
Who does the scheme apply to?
The scheme is available to employers from all sectors (excluding the public service and non-commercial semi-state sector) whose business activities are being adversely impacted by the COVID-19 pandemic.
It is open to employers who retain staff on payroll; some of the staff may be temporarily not working or some may be on reduced hours and/or reduced pay. Provided the employer meets the conditions set out below and, subject to the levels of pay made to employees, the employer may be eligible for the scheme for some, or all of its employees.
Facility to include employees returning to work following a period of Maternity or other related leave or, where they were in receipt of Illness or other benefits paid by the Department of Employment Affairs & Social Protection (DEASP)
Following the announcement by the Minister for Finance and Public Expenditure and Reform on 29 May 2020, Revenue has implemented a change to the Scheme to accommodate employees returning to work and who were not on their employer’s payroll on 29 February 2020:
- following a period of Maternity, Adoptive leave or related unpaid leave, or a period of Paternity, Parental or related unpaid leave
- having been in receipt of Health and Safety or Parent's benefit paid by the DEASP for the month of February 2020
- having been in receipt of Illness benefit paid by the DEASP for the month of February 2020.
A manual process to introduce this facility for such employees and their employers is now available. Employers wishing to provide the subsidy to an employee returning from Maternity, Adoptive, Paternity, Parental or related unpaid leave since 26 March 2020, or having received certain DEASP benefits, should log on to ROS MyEnquiries, click ADD 'A New Enquiry' and select the current category 'Covid-19: Temporary Wage Subsidy', subcategory: 'TWSS - Maternity and other Benefits'.
Revenue will manually calculate a net weekly pay for each employee concerned and will create a revised ‘CSV file’ for the employer. For each employee who has returned to the payroll, Revenue will apply the scheme retrospectively to the date of return to employment or 26 March 2020 at the earliest.
Facility to include Apprentices Returning to Work
Following an announcement on 23 June by the Minister for Finance and Public Expenditure and Reform, and recognising that the exclusion from the TWSS of apprentices on block release from their employers for training purposes was an unintended consequence, Revenue has implemented a change to the TWSS which will accommodate apprentices returning to work who, in February 2020, were on an apprenticeship education and training programme run by SOLAS and were not on their main employer’s payroll in February 2020.
Employers wishing to access the TWSS subsidy on behalf of apprentices returning to work since 26 March 2020, should log on to ROS MyEnquiries, click ADD “A New Enquiry” and select the category “Covid-19: Temporary Wage Subsidy”, subcategory: “TWSS - Apprentices”. Revenue will then manually calculate a net weekly pay for each apprentice concerned and will create a revised ‘CSV file’ for the employer.
For each apprentice returned to the payroll by the employer, Revenue will apply the scheme retrospectively to the date of return to employment, or, the date the employer joined the scheme, or, 26 March 2020, whichever is the latest. For apprentices who were ceased from payroll and in receipt of the Pandemic Unemployment Payment (PUP), no retrospection to TWSS can apply. However, employers may rehire these apprentices and can operate TWSS to subsidise their pay.
Liability of wage subsidy payments to income tax and Universal Social Charge (USC)
The wage subsidy payments to employees are liable to income tax and USC; 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 and USC 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.
With the continuation of the Scheme to the end of August 2020, to mitigate the possible impact on the employee End of Year review, Revenue will place all employees that received payments under either the TWSS or the PUP on a Week 1 basis. Notifications to employers to operate the Week 1 basis are available in ROS since 21 June 2020. It is important that employers utilise the most up to date Revenue Payroll Notification (RPN) when running payroll so that employees are correctly switched to the Week 1 basis as quickly as possible.
To qualify for the scheme, employers must
- be experiencing significant negative economic disruption due to Covid-19
- be able to demonstrate, to the satisfaction of Revenue, a minimum of a 25% decline in turnover
- be unable to pay normal wages and normal outgoings fully
- retain their employees on the payroll.
The scheme is confined to employees who were on the employer’s payroll as at 29 February 2020, and for whom a payroll submission was made to Revenue in the period from 1 February 2020 to 15 March 2020.
After the scheme has expired, the names of all employers involved will be published on Revenue’s website.
With the extension of the Scheme to 31 August the eligibility criteria to continue participating within the scheme or to now join the scheme remains unchanged. Details of the eligibility criteria are available on the Revenue website.
Where a business, after reviewing its position and the economic impact of the pandemic, considers that it did not meet the eligibility criteria but had reasonable grounds for assuming it would, it should immediately cease claiming the subsidy for the extended scheme. Revenue will require evidence of the assumptions supporting the original self-assessment of eligibility and, once the basis is reasonable, will not seek to claw-back the subsidy paid for the original period. If there was not a reasonable basis, the subsidy is repayable.
Employers who consider they do not meet the eligibility criteria or who no longer wish to avail of the TWSS, should cease returning J9 PRSI Class payroll submissions to Revenue. Employers should ensure the employee J9 PRSI Class (J9 submissions) is reverted on future payroll submissions for each employee to their normal PRSI class (Pre-Covid-19).
Those employers who have stopped participating in the TWSS will be included in the reconciliation phase of the scheme and will be included in the list of TWSS participants published at the end of the scheme.
Registering for the Temporary Wage Subsidy Scheme
Any employer, already registered with Revenue for the purposes of the Employer COVID-19 Refund Scheme, is not required to take any further action to avail of the current, or the revised, scheme. The employer may continue to make payroll submissions on the same basis as they were doing previously and €410 will be refunded in respect of each eligible employee per week.
Employers, or their agents, wishing to register for the scheme can apply to Revenue by carrying out the following steps:
- Log on to ROS myEnquiries, click ‘Add A New Enquiry' and select the category ‘Covid-19: Temporary Wage Subsidy’.
- Read the ‘Covid-19: Temporary Wage Subsidy Self-Declaration’ and press the ‘Submit’ button.
- Revenue will issue a confirmation via myEnquiries and the employer can immediately operate the scheme.
- Ensure bank account details on Revenue record are correct. These can be checked in ROS and in ‘Manage bank accounts’, ‘Manage EFT’, by entering the details of the refund bank account that the refund is to be made to.
ROS allows an employer to specify to Revenue the bank account to use for tax payments and the bank account to use for tax refunds. Both of these can refer to the same bank account number. Many employers will have an existing tax payment bank account set up in ROS, however, to receive refund payments from Revenue, including Temporary Wage Subsidy Scheme refunds, employers also need to add their refunds bank details. This can be done through ROS in ‘Manage bank accounts’, ‘Manage EFT’, by entering the details of the refund bank account that the refund is to be made to.
ROS Help has Instructions on how to setup a refund bank account.
Operating the scheme from 26 March 2020
As outlined above, from 4 May the scheme will move to a subsidy payment based on each employee’s normal net weekly pay (see further information below). In the interim, the subsidy scheme will initially refund employers up to a maximum of €410 per each qualifying employee regardless of the employee’s income. However, for administrative purposes and to allow for future reconciliation of subsidy payments made, employers should enter the following details when running their payroll:
- Set PRSI Class to J9.
- Enter a non-taxable amount up to 70% of the employee’s net weekly pay to:
- maximum of €410 per week where the average net weekly pay is less than or equal to €586
- maximum of €350 per week where the average net weekly pay is greater than €586 and less than or equal to €960.
- If an employer is not making any top up payment to the employee, they should include a pay amount of €0.01 in Gross Pay.
- If an employer is making an additional payment to the employee, they should include this amount in the Gross Pay.
- It is important that employers do not include the Temporary Wage Subsidy payment in Gross Pay.
- To avail of the wage subsidy, the wage subsidy plus any additional pay must not exceed the average net weekly pay.
- The payroll submission must include pay frequency and period number.
From 16 April 2020, the wage subsidy is available to support employees where their pre-Covid salary was greater than €76,000, and their post-Covid salary has fallen below €76,000, subject to the tiered arrangements and tapering to ensure that the net pay does not exceed €960 per week.
In these cases where the employee’s earnings have now been reduced by
- less than 20%, no subsidy is payable
- between 20% and 39%, a subsidy of up to €205 is payable
- 40% or more, a subsidy of up to €350 is payable.
The maximum subsidy payable is calculated by reference to the employee’s previous net weekly pay for January and February 2020 and the gross pay being made by the employer. As below, the subsidy is tapered to ensure that the net weekly pay (employer’s contribution and wage subsidy) of the employee does not exceed €960 net per week.
Income tax, USC, LPT, if applicable, 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.
In many cases the payment of the Temporary Wage Subsidy and any additional income paid by the employer will result in the refund of Income Tax or USC already paid by the employee. Any Income Tax and USC refunds that arise as a result of the application of tax credits and rate bands can be repaid by the employer and Revenue will also refund this amount to the employer.
Employers must not operate this scheme for any employee who is making a claim for duplicate support (e.g. Pandemic Unemployment Payment) from the DEASP. Where an employee previously laid off has been re-hired, the employee will qualify for the Subsidy Scheme once their DEASP claim is ceased.
Based on the information provided in payroll submissions and adherence to the maximum limits, described above, Revenue will credit employers with the Temporary Wage Subsidy paid to each employee.
Penalties will apply to any abuse of the Subsidy Scheme by self-declaring incorrectly, not providing funds to employees or non-adherence to Revenue, and any other relevant, guidelines.
Operating the scheme from 4 May 2020
In accordance with Section 28 of the Emergency Measures in the Public Interest (Covid-19) Act 2020, the Minister for Finance made a determination on Wednesday 15 April to improve the subsidy for those whose average net weekly pay for January and February 2020 was less than €500 as well as those whose average net weekly pay was in excess of €960. These revisions will be effective for payroll submitted to Revenue on or after 4 May 2020, with a pay date on or after that date. In addition, the operation of the scheme will ensure that employers are informed of the maximum personal subsidy amount in respect of each individual employee based on their previous average net weekly pay.
Revenue has calculated each employee’s Maximum Weekly Wage Subsidy (MWWS) based on the employee’s Average Revenue Net Weekly Pay (ARNWP) and is providing this, along with other necessary information, to each employer (who is operating the scheme) in respect of each active employee. Where an individual has more than one employment Revenue will calculate the ARNWP at employment and employee level and provide information to each employer on the MWWS applicable for that employment.
The information will be provided for download in a format called a CSV file. The employer can either import this information into their payroll software and the payroll software will use this information, or use the information outside of payroll software along with the new rates and any Additional Gross Payment (top-up) amount, to calculate the wage subsidy for each eligible employee.
The Employer CSV data file can be downloaded from ROS. Where an employee is marked as eligible in the file this indicates that the employer has the necessary qualifying payroll submissions for the employee’s information. Further details are available in the Appendix 2 of the Frequently Asked Questions Guidance on the Operational phase of the COVID-19: Temporary Wage Subsidy Scheme. Alternatively a video outlining the step by step procedure to download the file is below.
Rates of subsidy from 4 May 2020
It is expected that the following new rates will apply to payroll submitted from 4 May with a pay date on or after that date until the end of the scheme. (No backdating of the revised rates prior to 4 May will apply.)
Employees previously earning up to €586 net per week
- An 85% subsidy, to a maximum of €350, shall be payable in the case of employees whose previous average net weekly pay does not exceed €412.
- A flat rate subsidy of up to €350 shall be payable in the case of employees whose previous average net weekly pay is more than €412 but not more than €500.
- A 70% subsidy shall be payable in the case of employees whose previous average net weekly pay is more than €500 but not more than €586, with the maximum cap of €410 applying.
Employees previously earning in excess of €586 net per week
- For employees whose average net weekly pay is greater than €586 per week but not more than €960 per week, the temporary wage subsidy shall not exceed €350 per week, and shall be calculated with reference to the gross salary paid by the employer and its effect on net average wages as follows:
- A subsidy of €350 shall be payable to employees with average net weekly pay greater than €586, where the employer pays sufficient gross salary which equates to an amount up to 60% of the employee’s net weekly earnings;
- A subsidy of €205 shall be payable to employees with average net weekly pay greater than €586, where the employer pays sufficient gross salary which equates to an amount that is more than 60% but not more than 80% of the employee’s net weekly earnings;
- No subsidy shall be payable to employees with average net weekly pay greater than €586, where the employer pays sufficient gross salary which equates to an amount that is more than 80% of the employee’s net weekly earnings.
The new arrangements also mean that the wage subsidy is available to support employees where their pre-Covid salary was greater than €76,000, and their post-Covid salary has fallen below €76,000, subject to the tiering and tapering rules.
Tapering of the subsidy shall apply to all cases where the gross pay paid by the employer plus the subsidy amount exceeds the previous average net weekly pay. This is calculated by subtracting the gross pay paid by the employer from the previous average net weekly pay and ensures that no employee would be better off under the scheme. The single exception to tapering is where an employer wishes to pay an employer contribution which when added to the wage subsidy for the employee does not exceed €350 per week. In such cases, tapering of the temporary wage subsidy shall not be applied.
As the economy and business start to recover from the effects of the pandemic, and public health restrictions are lifted, employers are increasing the amounts of wages that they are paying. Where wages return close to or above each employee’s normal pre-Covid wages, the wage subsidy amounts available to employees through their employer will reduce through the tapering mechanism and, in some cases, may result in no subsidy being refunded.
There is no change in the basis of calculation of the subsidy amount for the extended period to 31 August 2020 and the arrangements in place since the start of the Operational Phase on 4 May 2020 continue.
Employee subsidy information viewable in myAccount
Details of TWSS subsidy payments being made to employers on behalf of employees are now viewable in each employee’s Revenue record, which can be accessed via myAccount. Through this facility, employees can see whether their employer is participating in the TWSS on their behalf. Employees can view this information by accessing the ‘Manage your Tax 2020’ link on the ‘PAYE Services’ card in myAccount and select the ‘View’ link beside the relevant employment. The employee should click on the ‘View’ link next to any payroll submission they wish to see.
Where employees identify discrepancies between the TWSS amounts shown in myAccount and those provided by the employer, Revenue advises employees to firstly contact the employer to have the matter rectified (employers are obliged to rectify any issue identified). If it is not subsequently rectified to the employee’s satisfaction, they should contact Revenue directly via MyEnquiries under the category 'PAYE (Pay As You Earn) employee/pensioner - Other' and the subcategory 'Employee Payroll Reporting - Compliance'.
To ensure the scheme is operating correctly Revenue is conducting a programme of compliance checks on all employers availing of the scheme and will be contacting all employers to confirm that:
- They meet the eligibility criteria;
- Employees are receiving the correct amount of subsidy; and
- The subsidy amount is being correctly recorded in employee payslips.
The compliance check programme will also address any identified issues in respect of the operation of Real Time PAYE (PMOD) by employers over 2019 and 2020 and will also provide an opportunity for employers to address any other outstanding tax issues. This will be of importance to employers who may intend to avail of the “debt warehousing” scheme for Employer PAYE and VAT liabilities incurred during the pandemic period as up-to-date compliance will be a pre-requisite in order to avail of that scheme.
Letters will issue to employers and their agents, where relevant, mainly through the ROS Inbox. The programme is expected to last for several months.
It is essential that employers respond promptly as failure to do so may lead to suspension of future payments.
Revenue have published detailed guidance on the scheme, Frequently Asked Questions, sample subsidy calculators and employer eligibility information. The documents are updated on an ongoing basis, these include:
Additional guidance can be accessed from our Guidance on employer eligibility for Temporary COVID-19 Wage Subsidy Scheme page.
For general issues relating to the scheme, employers should contact Revenue’s National Employer Helpdesk via the myEnquiries system, providing details of the query and a direct dial contact number.
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