People on the Pandemic Unemployment Payment who go back to work this year face a higher income tax bill.
This is because the tax rules for the payment are different in 2021 compared to 2020.
In 2020, people on the PUP who returned to work had the option of spreading the tax bill from the payment over several years.
This has now changed.
Norah Collender from Chartered Accountants Ireland, says now the tax will instead be due at the end of the year in which someone returns to their job.
”The tax payer is going to be paying back the tax on the pandemic unemployment payment when they go back to work and that will take the form of a reduction in their tac credits and rate bands.”
But Marian Ryan, the consumer tax manager with Taxback.com, says the tax bill will be relatively small.
”So for every week they’re on the PUP, potentially theyre tax benefit could be reduced by €7. That’s standard for a 20% tax payer. If someone is a higher tax payer, so if they are a 40% tax payer that would double then. That would be €14 per week.”
Revenue says the changes were made to bring the PUP in line with other payments, and make sure tax bills don’t mount up.
