Paschal Donohoe (Dublin Central, Fine Gael)
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The rate of Pandemic Unemployment Payment (PUP) payable to individuals is a matter for the Department of Social Protection (DSP).

I am advised by Revenue that, regarding taxation, PUP payments are classed as income and as such are liable to tax but not PRSI or Universal Social Charge (USC). In 2020, PUP was taxed at year end rather than in the normal real-time manner due to the urgent requirement to get payments to people as quickly as possible. For PAYE employees, where tax liabilities remain for 2020 after all tax credits and entitlements are allocated, the amount due can be collected, interest free, over four years from 1 January 2022 by reducing their tax credits.

The situation for self-employed workers is different in that the tax due on PUP payments received in 2020 is accounted for by completing the usual self-assessed tax return by 31 October 2021 and paying the amount due (17 November 2021 if filing and paying via ROS). In situations where a self-assessed taxpayer cannot pay the tax due it may be possible to avail of the Debt Warehousing Scheme or a suitable phased payment arrangement. Further information on the Debt Warehousing Scheme is available on the Revenue website.

The continuation of the PUP into 2021 has re-established the practice of operating PAYE in the normal (real-time) manner for such payments. However, people receiving PUP payments in 2021 will only pay tax when they return to work. The tax due is collected over the remaining pay periods in 2021 by reducing the person’s tax credits. For self-employed people, with no income taxed under PAYE, the tax due on PUP payments received in 2021 will not fall due until October 2022.

Revenue further advise me that the person in question is self-employed and is also in receipt of an occupational pension. The tax due on the PUP payments received in 2021 is being collected by reducing the tax credits allocated to his occupational pension. The tax due on the PUP payments received in 2020 should be included in his 2020 tax return. If he is unable to pay the amount due, Revenue has assured me that it will engage with him regarding the situation. This will include the possibility of warehousing the debt, assuming he meets the eligibility criteria for that scheme, or alternatively providing him with a phased payment option that best suits his circumstances, thereby ensuring any financial hardship is minimised to the greatest extent possible.