Now that the PUP is due to come to an end on 30 June 2021, this explains how the payments have been taxed in 2021 and what happens when they cease.
Since 1 January 2021, the Department of Social Protection (DSP) has informed Revenue on a weekly basis of the amount of PUP paid to each recipient. The tax due on the payment is collected by reducing the person’s tax credits and rate band. The weekly amount of PUP is annualized and the annual tax credits and rate band reduced. The adjusted tax credits and rate band have been applied on a week 1 basis. In most cases, no additional tax liability will arise at the end of 2021.
An individual must advise the DSP immediately if he/she has returned to work. The DSP advises Revenue that the PUP payments have ceased and the individual’s tax credits and rate band are readjusted to normal entitlements on a week 1 basis. This readjustment will also be made when the payments cease on 30 June 2021.
In January 2022, an employee can complete an income tax return through ‘My account’ for 2021 to obtain a statement of tax liability for 2021. This will show the final tax and USC liabilities for 2021 and any overpaid tax/USC will be refunded.