Dáil Éireann Debate, Wednesday - 24 February 2021
159. Deputy Claire Kerrane asked the Minister for Finance the steps taken to ensure the timely transition of tax credits for persons who were previously in receipt of the pandemic unemployment payment and have now returned to employment; the timeline his Department is working to in order to address these delays; and if he will make a statement on the matter. [9406/21]
View answer160. Deputy Claire Kerrane asked the Minister for Finance the action being taken to ensure persons who were in receipt of the pandemic unemployment payment and have now returned to employment are not overpaying tax as a result of delays regarding the transition of tax credits; and if he will make a statement on the matter. [9407/21]
View answerI propose to take Questions Nos. 159 and 160 together.
Revenue has advised me as follows:
The continuation of the Pandemic Unemployment Payment (PUP) into 2021 has re-established the practice of operating PAYE in the normal (real-time) manner for such payments. It is also important to note that PUP recipients will only pay tax when they return to work.
When a recipient returns to work, he or she should immediately cease the PUP claim with the Department of Social Protection (DSP). DSP will then notify Revenue that the payment has ceased, and Revenue will adjust the employee’s tax credits accordingly. For a person who is on the PUP at the start of the year, the weekly amount is annualised on the Tax Credit Certificate (TCC), with automatic knock on impacts on the tax credits and standard rate cut off point. This ‘annualisation’ operates as if the person is to remain on the PUP for the full year. When the person comes off PUP the TCC is amended to reflect the fact that the payment has ceased.
A revised instruction (Revenue Payroll Notification) then issues to the relevant employer to reflect the updated position and the revised TCC issues to the employee via the online myAccount service. Any delay in issuing the revised instruction to the employer will delay the employee receiving his or her full tax credit entitlements so prompt notification by the employee to the DSP is very important.
The employee should also confirm with his or her employer that deductions of tax are being made based on the most up to date Revenue Payroll Notification issued to the employer by Revenue.
Furthermore, where a self-employed individual incurs a loss for a year of assessment, a provision is available that allows the individual to elect to have that loss offset sideways against other income of the individual, or in cases of joint assessment, against income of the individual’s spouse/civil partner. Therefore, where an individual has incurred a loss in 2020, they may utilise this loss to shelter a tax liability arising from receipt of the PUP.
Finally, Revenue has confirmed to me that there is no delay between receipt of DSP notifications of PUP cessations and the subsequent adjustment of the relevant employees’ tax credits, which operates through an electronic data transfer. However, if any persons are concerned that they are overpaying tax on PUP payments they should contact Revenue’s National PAYE Helpline at 01-7383636.
