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PAYE Wage Subsidy, calculate 2020 gross taxable?

  • 01-11-2020 8:19pm
    #1
    Me2U2
    Registered Users, Registered Users 2 Posts: 22 ✭


    Just a quick question if anyone knows the answer. I’m trying to budget my 2021 tax return payment but am having trouble understanding what effect the wage subsidy has on my gross pay.
    The scenario is like this, using random figures.
    PAYE job total taxable pay for 2020 is €34K, normally over €43K
    Got the €350 wage subsidy for 19 weeks = €6,650

    The cut-off for the higher rate is around €40K. I also earn an extra €7K outside the main job. Does the wage subsidy mean I start paying higher rate on the full €7K I earn outside the PAYE job or is the wage subsidy being disregarded when it comes to crossing the rate bands this year?


Comments

  • #2
    mystic86
    Registered Users, Registered Users 2 Posts: 2,983 ✭✭✭mystic86


    Me2U2 wrote: »
    Just a quick question if anyone knows the answer. I’m trying to budget my 2021 tax return payment but am having trouble understanding what effect the wage subsidy has on my gross pay.
    The scenario is like this, using random figures.
    PAYE job total taxable pay for 2020 is €34K, normally over €43K
    Got the €350 wage subsidy for 19 weeks = €6,650

    The cut-off for the higher rate is around €40K. I also earn an extra €7K outside the main job. Does the wage subsidy mean I start paying higher rate on the full €7K I earn outside the PAYE job or is the wage subsidy being disregarded when it comes to crossing the rate bands this year?

    So let's say your rate band cut off is 35,300, and your credits are 3,300

    34k * 20% = 6,800, minus 3,300 = 3,500 - that's what you would have paid through your employment

    34k + 6.65k + 7k = 47.65k in total

    ((47.65-35.3)*40%)+(35.3k*20%) = 12k, minus credits = 8,700

    So you owe 8,700 but you've already paid 3,500, so you'll owe 5,200


  • #3
    Me2U2
    Registered Users, Registered Users 2 Posts: 22 ✭Me2U2


    mystic86 wrote: »
    So let's say your rate band cut off is 35,300, and your credits are 3,300

    34k * 20% = 6,800, minus 3,300 = 3,500 - that's what you would have paid through your employment

    34k + 6.65k + 7k = 47.65k in total

    ((47.65-35.3)*40%)+(35.3k*20%) = 12k, minus credits = 8,700

    So you owe 8,700 but you've already paid 3,500, so you'll owe 5,200

    Thank you, that’s in line with what I had in mind. I wonder though are Revenue adding the COVID subsidy to the PAYE pay for calculating tax this year? I heard they aren’t looking for the tax owed on this until 2022. That’s what has me confused about how I budget for this. Maybe the best thing is to just assume they are adding to normal gross pay for 2020.


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