I understand that this question relates to a person who received an increase in their Living Alone Allowance from the Department of Social Protection (DSP), while their occupational pension and state pension from the DSP are unchanged.
The mechanism used to tax payments from the DSP, where a person has an additional source of income (for example, an occupational pension), is by reducing the person’s annual tax credits and rate band by the annual amount of their DSP income. This ensures that their weekly payment from the DSP is paid gross to the recipient, while their weekly/monthly occupational pension paid by their pension provider will have any tax due on the DSP income and on the occupational pension deducted from it. Increases in weekly DSP payments can result in higher tax deductions from a person’s occupational pension and a reduced weekly/monthly net occupational pension as a result.
I am advised by Revenue that it has extensive data sharing arrangements with the DSP and Revenue is advised of any increased DSP payments. When such information is received, Revenue updates a person’s tax credits and rate band to reflect the increased DSP payments and notifies the person’s occupational pension provider through a revised ‘Revenue Payroll Notification’ (RPN). The person will also be notified of the changes via a revised ‘Tax Credit Certificate’ (TCC).
It is unclear how, over the course of a year following an increase in the weekly amount of a DSP Living Alone Allowance, a person’s combined net income from their occupational and State pensions (including the increased Living Alone Allowance) would be less overall as a result of tax deductions than before they received the increase.
If the Deputy wishes to provide details of the specific individual concerned, Revenue will review the case to ensure that the person is not suffering excessive tax deductions.
