Amongst many other vital schemes, programmes and incentives, the Government’s July stimulus package signposted the upcoming transition from the Temporary Wage Subsidy Scheme (TWSS) to the Employment Wage Subsidy Scheme (EWSS). Naturally, as the TWSS starts to draw to a close, the reconciliation of this scheme will begin. In today’s blog we shall give you an outline of what you can expect in the near future with respect to EWSS, as well as the purpose of and likely process for TWSS reconciliation as we come to the end of TWSS.
Employee Wage Subsidy Scheme
The EWSS is due to succeed TWSS in supporting employers in paying employee’s wages and will at least run until April 2021, with the possibility of extension after this date. TWSS is currently still in operation, but is due to close on 31 August. Although EWSS has now opened and is available for the months of July and August, if you are currently participating in the TWSS scheme you should not switch to EWSS until 1 September 2020. There are some fundamental differences between the two schemes, which we have detailed below:
Update 6 August: Proprietary directors reinstated to the EWSS from 1 September – see here.
EWSS vs TWSS
|Eligibility Criteria||25% reduction in turnover / Customer Orders / reasonable basis for Q2 of 2020||
30% reduction in turnover / Customer Orders for the period of July to December 2020, compared to the same period in 2019. (More to be announced for companies not in operation before July 2019).
Proprietary directors can partake from 1 September.
Certain restrictions for connected persons.
|Amount paid Under the scheme||Up to €410 per employee per week, dependent on salary and employer top ups||Up to €203 per employee per week, dependent on salary.|
|Purpose of the funding||Employee wages||Company subsidy|
|Tax on scheme amounts||Not subject to PAYE, USC or PRSI for employees or employers, but taxable on assessment for employees.||
Reinstatement of PAYE, USC and employee PRSI payroll deductions for employees. Employers PRSI contributions reduced to 0.5%.
Unclear on the tax treatment of the payments to the employer from the EWSS.
|Scheme Operational between||1 March to 31 August 2020||1 July 2020 to 31 March 2021|
Revenue is finalising the exact ways in which the EWSS scheme will be run and processed through payroll. They have also stated that if employers wish to participate in EWSS before 1 September, this must be done separately to payroll and so SimplePay will unfortunately not be able to assist you if this is what you wish to do.
When we have a full picture of how the scheme will be implemented and put into effect, we shall inform you on how SimplePay is catering to your needs and making your payroll a doddle!
Due to the nature of the situation brought about by COVID-19, the TWSS had to be implemented swiftly to ensure that companies and their employees were supported. Because it was important that employees received funds, the TWSS payments were treated as a non-taxable benefit in terms of PAYE, USC and PRSI, but would be taxable on assessment. Due to this expedited implementation, for the first two months that TWSS was running there was no way of recording the subsidy amount on an employee’s payroll submission. To address this, part way through the scheme Revenue introduced a new payment field labeled “other payment” to allow for subsidy payments to be recorded on employees’ payroll submissions.
The aim of the reconciliation is to:
- establish the actual subsidy amounts which were paid to each employee;
- see if the correct amounts were paid to each employee in the months before accurate subsidy values were provided by Revenue; and
- settle the difference for these early months between the employer’s and Revenue’s calculated values.
As the framework for this reconciliation process is being finalised, SimplePay will take all the necessary actions to make your processing of this as smooth and hassle free as possible.
We hope that you have found the above information useful. If you have any questions on how the information above relates to SimplePay, please feel free to contact us at [email protected]
Equally, if you are not yet a client of SimplePay but would like to be, or if you’d like to know how we can take the effort out of filing and calculating payroll, get in contact with us or visit our website: www.simplepay.ie
Keep well and stay safe.