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 will be extended until April 2021. New applications will be accepted until the end of 2020.
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.
Department of Employment Affairs and Social Protection (DEASP)
October 2020 – COVID-19 Pandemic Unemployment Payment Rates October 2020
September 2020 – COVID-19 Information for Redundancy Payments Scheme
September 2020 – Pandemic Unemployment Payment to remain open for new entrants
March 2020 – COVID-19 Information for Employers
March 2020 – Workers who are laid off temporarily (COVID-19)