Wednesday, 20 May 2020
Department of Finance
113. To ask the Minister for Finance if recipients of the Covid-19 pandemic unemployment payment will be subjected to tax on the payments at a later date; if no decision has been made, when a decision will be made; and if he will make a statement on the matter. [6566/20]
Payments made under the Pandemic Unemployment Payment (PUP) Scheme are an income support and share the characteristics of income. Other income earners in receipt of comparable “normal wages” are taxable on those wages. In the interest of equity, therefore, payments made under the PUP scheme are subject to income tax. However, tax will not be collected in real-time while the scheme is in operation. In the case of the PUP, the taxation position will follow the general taxation rule for social welfare payments and, thus, while liable to income tax, the payments will be exempt from PRSI and the Universal Social Charge. This will be the case whether the recipient of the PUP is either a former PAYE worker or a person who was previously self-employed.
While not liable to tax in real time under the PAYE system, the liability to tax on payments under the PUP scheme will instead normally be determined by way of review at the end of the tax year. I am advised by Revenue that 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 as a result of taxation of PUP payments. Where this is not the case and should a 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 or future years 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. I have been assured by Revenue that they will be adopting a fair and flexible approach to collecting income tax due on payments made under the PUP scheme.