Written answers

Tuesday, 15 February 2022

Department of Finance

Covid-19 Pandemic Unemployment Payment

Photo of Brendan GriffinBrendan Griffin (Kerry, Fine Gael)
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282. To ask the Minister for Finance the advice he can provide in relation to a matter (details supplied); and if he will make a statement on the matter. [7527/22]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue as follows:

Pandemic Unemployment Payments (PUP) are classified in legislation as income supports and as such are subject to income tax but are exempt from the Universal Social Charge (USC) and Pay Related Social Insurance (PRSI).

The PUP was not taxed in the normal ‘real-time’ manner in 2020, meaning the collection of any tax due was deferred until year end. This approach was adopted to ensure that payments reached recipients as quickly as possible, given the suddenness of the pandemic and in the expectation at the time that the emergency supports would be short-term in nature, which turned out not to be the case due to the continued prevalence of COVID-19.

From 2021, the mechanism to tax the PUP, in common with other Department of Social Protection (DSP) payments, including Jobseekers’ Benefit and Illness Benefit, is to reduce the recipient’s tax credits and rate bands, ensuring as far as possible, that the right amount of tax is collected at the right time thereby preventing arrears building up. Where employees return to work following PUP, they are placed on a Week 1 basis to minimise potential financial hardship and prevent any further underpayments arising in the year.

Where tax liabilities (including PUP) still existed for 2020 after all additional tax credits such as health expenses were applied, the outstanding balance is automatically collected interest free over four years from 1 January 2022 by reducing the employee’s tax credits. For employees that have an overpayment on record for 2021, the amount due is automatically offset to the underpayment for previous years. This is normal practice to ensure the taxpayer’s overall tax position is rectified as soon as possible, allowing restoration of full tax credits.

Revenue has confirmed that taxpayers engaging a tax agent do so at their own discretion and any commission paid is a matter between both parties. Revenue has also confirmed that it provides a comprehensive range of online services for taxpayers to self-manage their tax affairs. These services, which include an online communication channel through the MyEnquiries system, are available 24/7, are easy to use, are fully secure and, in most cases, remove the need to contact Revenue or engage a tax agent.

For taxpayers whose tax affairs are more complex and require direct engagement, Revenue provides a one to one appointment service with the relevant official. These engagements can be carried out remotely by video conferencing if required. Such an appointment can be arranged by contacting Revenue at 01-738 3660 from 09.30 to 13.30 (Monday to Friday).

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