Dáil Éireann Debate, Wednesday - 24 March 2021
504. Deputy John McGuinness asked the Minister for Finance if the tax liability of a person (details supplied) will be re-examined immediately in view of the fact that the reduction in their income due to tax is causing hardship. [15759/21]
View answerI am advised by Revenue that the persons’ tax credits and rate band allocations have been reduced in 2021 to collect the tax due on their Department of Social Protection (DSP) Pandemic Unemployment Payments and Carer’s Income supports.
The mechanism to tax the PUP for 2021, in common with other DSP payments, including Carer’s Income and Jobseekers’ Benefit, is by reducing the recipient’s current year tax credits and rate bands. In taxing PUP payments in this manner, which is in accordance with the legislation, Revenue is ensuring, as far as possible, that people do not end up with a tax liability at the end of 2021 that will have to be paid in future years. The avoidance of such tax arrears to be paid in future years is particularly important in circumstances where taxpayers may already have an arrear in respect of 2020.
Revenue has confirmed that tax credits previously allocated to the assessable spouse’s employment are now allocated to his occupational pension to ensure the most effective benefit to him. Subject to the revised instruction from Revenue to the occupational pension provider (Revenue Payroll Notification) being implemented by the provider before it completes the March payroll run, the person will pay a reduced tax amount of approximately €203 for the month.
Once the person returns to work, he should immediately contact DSP and ensure his PUP payments are stopped. In turn, DSP will notify Revenue that the payment has ceased, and Revenue will then re-adjust his tax credits to reflect the fact that the payment has stopped. Revenue will also issue a revised instruction to his employer/pension provider to reflect the updated position and a revised Tax Credit Certificate will issue to him. Any delay in issuing the revised instruction to the employer will delay receipt of his full tax credit entitlements, so prompt notification of his return to work to the DSP is very important.
Finally, Revenue has also advised me that the person’s spouse may be entitled to claim the Home Carer’s Tax Credit for 2021 and for previous years if she meets the qualifying criteria, which is set out at link: www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/health-and-age/home-carer-credit/qualifying-for-home-carer-tax-credit.aspx. If the person’s spouse considers that she is eligible for the credit, she should complete a ‘Home Carer Tax Credit Claim’ form through Revenue’s myAccount service, which is available at link https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/documents/home-carers-credit-claim-form.pdf.
