Pandemic Unemployment Payment (COVID-PUP)

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Pandemic Unemployment Payment (COVID-PUP)

The COVID-19 Pandemic Unemployment Payment (COVID-PUP) is available to employees and the self-employed who have lost their job on or after 13 March 2020 due to the COVID-19 pandemic. The COVID-PUP was originally intended to run until 10 August 2020 however, as part of the July Jobs Stimulus is was announced that the COVID-PUP would be extended until April 2021.

In February, Minister for Social Protection, Heather Humphreys T.D., secured Government approval to extend the COVID-PUP and the Enhanced Illness Benefit until 30 June 2021. Minister Humphreys confirmed that the COVID-PUP would remain open for new applications and that the COVID-PUP would continue to be paid at four rates (€350, €300, €250 and €203) which are linked to a person’s prior income.

On 1 June 2021, the Government launched the Economic Recovery Plan 2021. The Plan sets out a new phase of supports for the next stage of the economic recovery after the COVID-19 pandemic. As part of the measures announced in the Economic Recovery Plan, the COVID-PUP will be extended in its current form for existing claimants from 30 June to 7 September 2021. The weekly rates of COVID-PUP support paid to claimants will be gradually reduced over three phases by €50 increments, as follows:

The €350 weekly rate will be reduced by €50 increments on 14 September and in mid-November 2021. In early February 2022, the rate of payment will change to €203 with the payment moving to the standard jobseekers’ terms.

The €300 weekly rate will change to €250 on 14 September and €203 in mid-November with the payment moving to the standard jobseekers’ terms.

The €250 weekly rate will change to €203 on 14 September and then transfer to the standard jobseekers’ terms from mid-November.

The €203 weekly rate will remain until 7 September. After that date, the standard jobseekers’ terms will apply.

The COVID-PUP will cease for full-time students from the start of the 2021/2022 academic year. The last payment to students will be 7 September 2021.

The scheme was due to close to new applicants from 1 July 2021, however, following the decision by the Government on 29 June to postpone the reopening of indoor dining, Minister for Social Protection and Minister for Rural and Community Development, Heather Humphreys T.D., confirmed that the deadline for closure of the COVID-PUP for new applicants would be extended to 7 July. This was to ensure workers impacted by the delay in reopening would be able to reapply for the COVID-PUP and people who had already returned to work to prepare for an anticipation of businesses reopening will not be disadvantaged. New applications for the COVID-PUP will no longer be accepted after 7 July.

Irish Tax Institute Representations

In response to queries from our members on the tax treatment of the COVID-PUP, the Institute contacted the Department of Employment Affairs and Social Protection (DEASP) along with the Department of Finance and Revenue to confirm whether the COVID-PUP is a taxable source of income.

In response to our enquiries Revenue and the Department of Finance confirmed that in general, social welfare payments are a taxable source of income unless they are on a list of tax-exempt payments, which have been confirmed as exempt by a legal mechanism. The DEASP confirmed that the COVID-PUP is not currently on the list of tax-exempt payments. On 17 April, Revenue and the Department of Finance confirmed to the Institute that the COVID-PUP, as it stands, is chargeable to income tax under Schedule D, Case IV. However, Revenue and Department of Finance officials are examining the appropriate schedule under which the payment should be taxed (i.e. Schedule D versus Schedule E). We will update members on any further clarifications received.

In a press release on 25 September 2020, Revenue provided further details on the taxation of the COVID-PUP which was not taxed in real-time but is liable to income tax and USC at the end of 2020.

Head of Personal Division, Declan Rigney, explained that in January 2021, Revenue will make a Preliminary End of Year Statement available to all employees, including those who were in receipt of the Temporary Wage Subsidy Scheme (TWSS) or COVID-PUP. This statement will include pre-populated information showing the amount of TWSS and/or COVID-PUP payments, if any, received by the employee concerned according to Revenue records. It will also provide employees with a preliminary calculation of their income tax and USC position for 2020 (i.e. whether their tax position is balanced, underpaid or overpaid for the year).

Once the Preliminary End of Year Statement is available, employees will have an opportunity to update their personal record, declare any additional income and claim additional tax credits due, such as, qualifying health expenses, via MyAccount, to arrive at their final liability for 2020.