Help-to-buy applicants won't be penalised for taxes owed on Covid support payments

Help-to-buy applicants won't be penalised for taxes owed on Covid support payments

Thousands of workers across the country will be saddled with a tax bill in the coming days, experts have warned, after receiving either the Pandemic Unemployment Payment (PUP) or the Temporary Wage Subsidy Scheme (TWSS). Picture: Laura Hutton/RollingNews.ie

Leeway will be given to first-time home buyers by Revenue for their help-to-buy (HTB) applications in relation to outstanding tax bills owed due to pandemic-related emergency payments.

Thousands of workers across the country will be saddled with a tax bill in the coming days, experts have warned, after receiving either the Pandemic Unemployment Payment (PUP) or the Temporary Wage Subsidy Scheme (TWSS).

However, the bills will not have to be paid this year or next, advisory firm Taxback.com said, urging people "not to panic".

It will take many workers by surprise that they even owe such a sum, Taxback added, but the tax liability will not be due this year or even next year.

People are not expected to make a lump sum payment, but rather Revenue will reduce a person’s tax credits over a period of between two to four years from 2022, Taxback said.

Would-be first-time buyers wondering if the unpaid bill would affect their applications for HTB have been assured by Revenue that it will not disqualify them.

Currently, according to the process, before an application for HTB, PAYE workers must submit an income tax return for each year they wish to apply for a payment, and pay any outstanding tax due, while self-assessed workers must be fully tax compliant and have tax clearance. 

The scheme is designed to assist first-time buyers with obtaining the deposit required for a home, and gives a refund of income tax and Dirt paid in Ireland over the previous four years.

Revenue said: "In relation to the tax due, if any, on amounts received under TWSS or PUP, employees will be given the opportunity to fully or partially pay any income tax liability through the payments/prepayments facility in myAccount [Revenue's online system].

Otherwise, Revenue will collect the liability, interest free, by reducing the employee's tax credits over four years to minimise any hardship. The reduction of tax credits will start in January 2022."

Where an underpayment of tax arises for the year 2020 due to TWSS or PUP, leeway will be given, Revenue said.

Revenue will allow a claim for HTB relief for the amount of income tax paid for 2020, it said.

Revenue will not require the outstanding tax liability to be paid in advance where the underpayment of tax is due to be collected from 2022 by reducing the claimant’s tax credits. 

This will only apply where all other conditions of the HTB scheme are satisfied, it said.

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