Dáil Éireann Debate, Tuesday - 14 July 2020
308. Deputy Richard Boyd Barrett asked the Minister for Finance the way in which those self-employed persons now on Covid-19 payments will be taxed in 2020 and into 2021; and the way in which their tax credits will be applied for this tax year and the next; and if he will make a statement on the matter. [15417/20]
Amharc ar fhreagraPayments made under the Pandemic Unemployment Payment (PUP) scheme are income supports and share the characteristics of income. Other income earners in receipt of comparable “normal wages” are taxable on those wages. In the interest of equity, therefore, payments under the PUP scheme are subject to income tax. However, following the general taxation rule for social welfare benefit, payments under the PUP scheme are exempt from the USC and PRSI charges.
The PUP payments are not taxed in real-time. Thus, self-employed taxpayers must complete and return their annual income tax return (Form 11) by 31 October in the following tax year and pay the tax due in respect of PUP payments when making their annual income tax payment. Revenue advises me that it will pre-populate the Form 11 with details of the cumulative PUP payment amounts paid to self-employed taxpayers.
In cases where the tax liability for the PUP payments exceeds unused personal tax credits for 2020, the level of tax due by the person may be reduced or eliminated by the amount of unused tax credits available to him or her at the end of the year. Any liability due may also be further reduced if the person has additional tax credits, for example health expenses, to offset.
Revenue advises me that the final calculation of the end of year liability for each person is dependent on a range of factors, including a person’s civil status, their available tax credits, the amount received under PUP, as well as other entitlements and credits, such as health expenses. As there are considerable differences in each person’s tax circumstances, it is not possible to provide details of the estimated undercharges arising from the taxation of payments under the PUP, nor to estimate the numbers of individuals who may have such undercharges. These details will not be available with any degree of accuracy until after the year end.
