Revenue update on Preliminary End of Year Statement for PAYE taxpayers

Note

Provisional statistics from Revenue provide key insights into the preliminary end of year tax position for all PAYE taxpayers.

Overall summary:

  - 43% had a balanced position, meaning they paid the right amount of tax

  - 30% overpaid tax and/or USC totalling €436m

  - 27% underpaid tax and/or USC totalling €458m.

Preliminary End of Year Statements will be available to PAYE taxpayers from tomorrow, following the processing of final, confirmed monthly December 2020 PAYE (Employer) returns, which are due by midnight tonight.

Today (14/1/2021) Revenue published provisional statistics in relation to the preliminary end of year tax position for all PAYE taxpayers for the year 2020.

PAYE Modernisation brought about many significant efficiencies and improvements for employers, employees and Revenue. For the second year since the reform of the PAYE system, Revenue will make a Preliminary End of Year Statement available to all PAYE taxpayers. These preliminary statements will be available in myAccount from tomorrow, following the processing of final, confirmed monthly December 2020 PAYE (Employer) returns, which are due by midnight tonight.  

The Preliminary End of Year Statement sets out a provisional tax position for 2020, based on information available on Revenue records, including any Temporary Wage Subsidy Scheme (TWSS) payments reported by the individual’s employer and/or Pandemic Unemployment Payment (PUP) amounts received from the Department of Social Protection.

Commenting on the some of the key findings contained in today’s published statistics, head of Revenue’s Personal Division, Mr. Declan Rigney, said:

“Revenue understands that 2020 was a difficult year for many employees. From tomorrow, all PAYE taxpayers will have access to their Preliminary End of Year Statement, which will be available in myAccount. This will bring a level of visibility, assurance and certainty to those who were concerned about their end of year position, particularly in the light of some of the recent media and public commentary that suggested large amounts of tax could be owed.

At the outset, it is very important to note that the PAYE end of year process relates to all PAYE taxpayers rather than any particular subset.  Today’s statistics clearly show that across the entire PAYE case base, including those in receipt of TWSS and/or PUP subsidy payments, over 80% have a preliminary end of year tax position that is either balanced, overpaid or underpaid by less than €200.

Given that Revenue has confirmed that it will collect any tax owing, interest free, over a 4-year period, this equates to a collection of €1 extra in tax per week for those with an underpayment of €200. The provisional data also indicates that over 706,000 taxpayers are in a refund position.

For those PAYE taxpayers that were in receipt of one or more of the wage supports during 2020, about 47% are either due a refund or have no additional liability; a further 23% have an additional tax liability of less than €500 and a further 15% have an additional tax liability of between €500 and €1,000. Revenue is very aware that underpayments could cause financial difficulties for some people and wish to reassure these taxpayers that collection will not start until January 2022, one year from now. Also, given the collection of the amount owed will be spread over 4 years, an underpayment, for example, of €1,000 will be collected in amounts of just under €5 per week.

It’s also worth noting that approximately 143,000 PAYE taxpayers have already submitted income tax returns for 2020 which, in many instances have included claims for additional tax credits such as health expenses, nursing home fees and contributions made to an AVC. These additional credit amounts will be taken into account when calculating the end of year position for these taxpayers and are reflected in the provisional statistics. This is one of the reasons why we are seeing some larger overpayment amounts.

On the other hand, we are seeing some taxpayers that owe a larger than average amount of tax when compared across the entire PAYE case base, and this is regardless of whether ithe taxpayer was n receipt of TWSS and/or PUP payments or not. We also note that approximately 34% of PAYE taxpayers that have an underpayment of tax, were not in receipt of any subsidy supports in 2020. There are a number of common reasons why these underpayments occur, for example, employers not operating the most up to date Revenue Payroll Notification (RPN). These liabilities can also be collected, interest free, over 4 years starting in January 2022. However, it is important to note that PAYE taxpayers in underpayment situations may have additional tax credits to claim in respect of 2020, which will reduce, or in some cases possibly eliminate, the amount owed.”

 Mr. Rigney went on to outline the next steps for PAYE taxpayers:

“The Preliminary End of Year Statement is only a provisional tax position. An employee can finalise his or her tax position for 2020 by completing an income tax return online. This tax return will be pre-populated with the information shown on the Preliminary End of Year Statement which makes it relatively straight forward to complete and minimises the possibility of errors and omissions. Completing a tax return allows an employee to review the information presented and to claim additional tax credits, such as health expenses, or declare additional incomes, as appropriate. Once an employee submits his or her tax return, a Statement of Liability will issue shortly afterwards, setting out the final tax and USC position for the year.”

Finishing with some key advice for PAYE taxpayers, Mr Rigney said:

“There are some important things for PAYE taxpayers to keep in mind in relation to the Preliminary End of Year Statement:

• Your Preliminary End of Year Statement will be available in myAccount from tomorrow
• This is a provisional tax position for 2020, and for those who may owe money there is no immediate tax bill or requirement to pay
• The action that you need to take is very straightforward – make sure you access your statement and check the accuracy of the personal information and figures displayed
• Approximately 5,600 employers or their agents have not returned data on TWSS payments made to approximately 50,000 employees. These employees will see a TWSS amount of €0 on their Preliminary End of Year Statement
• If the TWSS figure displayed doesn’t tally with the payments you received or you see a value of €0, you should contact your employer in the first instance to clarify the matter
• You can finalise your tax position for 2020 by completing an income tax return online
• This will be pre-populated with all the information Revenue has on record for you
• If you have additional tax credits to claim, such as health expenses, or additional income to declare you can do so when completing your tax return
• Once you submit your tax return, a Statement of Liability will issue shortly afterwards, setting out your final tax and USC position for the year
• The 143,000 PAYE taxpayers that have already submitted their return will receive their Statement of Liability early next week.” 

Provisional statistics in relation PAYE Preliminary End of Year Statements can be found at PAYE Preliminary End of Year Statements.

[Ends 14/01/2021]