Dáil Éireann Debate, Wednesday - 2 December 2020
48. Deputy Éamon Ó Cuív asked the Minister for Finance if the tax year income from the pandemic unemployment payment paid since March 2020 to 31 December 2020 will be assessed for income tax purposes for persons who make self-employed tax returns based on an accounting year from 1 April to 31 March each year; and if he will make a statement on the matter. [40704/20]
View answerPayments made under the Pandemic Unemployment Payment (PUP) are income supports and share the characteristics of income. The PUP follows the general taxation rule for social welfare type payments and, thus, is chargeable to income tax, but exempt from the USC and PRSI charges. This will be the case whether, prior to receipt of the PUP, the recipient was a PAYE worker or a self-employed individual.
The formal taxation arrangements for the PUP are being legislated for in Finance Bill 2020 and the legislation reflects the standard approach to taxation of social welfare benefits, including jobseekers benefit for the self-employed, which is to tax the benefits on an actual basis under Schedule E. In the absence of formal legislation providing for the taxation of the PUP, the payments would be taxable under Case IV of Schedule D, which would also be on an actual basis.
Being taxed on an actual basis means that for each tax year, recipients of the PUP are taxed on the payments that are actually received in the corresponding calendar year. This is the case regardless of the period for which a self-employed individual carrying on a trade or profession prepares his or her accounts for that trade or profession.
