Revenue confirmed at a recent TALC meeting that certain Pandemic Unemployment Payment (PUP) recipients will be returned to the cumulative basis, allowing them access to unused tax credits through the payroll system. The Government also announced gradual reductions in the PUP rates that take effect from 7 September.
The tax due on the PUP through 2021 is being collected by reducing a person’s tax credits and rate bands. In order to do this, Revenue ‘annualised’ the weekly amount of the PUP and reduced a taxpayer’s annual tax credits and rate bands by this amount on a week 1 basis. This sought to ensure that there would be no additional tax liability for most PUP recipients at the end of 2021.
Revenue confirmed at a recent TALC meeting that single individuals who were in receipt of the PUP on the lower rates below €350 throughout 2021 and recommenced employment will be returned to the cumulative basis, where their PUP claim is closed and there is a single employment on record, allowing them access to the their unused tax credits before the end of the year. As reported in Tax News recently, PUP recipients on the lower weekly payment rates of €203, €250 and €300 will have built up credits of between €3.46 and €22.86 per week on the PUP.
Revenue also confirmed that PUP recipients that are taxable as jointly assessed spouses with a single source of income on record and whose PUP claim is closed would also be returned to the cumulative basis.
With respect to other cases, Revenue will consider returning a PUP recipient to the cumulative basis on the merits of each individual case. Taxpayers can raise a query through MyEnquiries/MyAccount providing the specific detail of their situation for Revenue to establish if it would be advantageous to the taxpayer to be returned to the cumulative basis.
Revenue is working to return these taxpayers to the cumulative basis by early October. PUP recipients are required to close their claim with the Department of Social Protection on the day they return to work though www.MyWelfare.ie. Employers should remember that the latest Revenue Payroll Notification (RPN) should be used for each payroll run.
The Department of Social Protection confirmed that students returning to full-time education for the 2021/22 academic year received their final PUP payment on 7 September. It was also confirmed that the top three rates of the PUP will reduce by €50 this month. The maximum weekly rate of €350 will reduce to €300. The current rate of €300 will reduce to €250 and the current rate of €250 will reduce to €203. These new payment rates will be reflected in payments received on Tuesday, 14 September.
Two further phases of rate changes are scheduled to take place from 16 November 2021 and 8 February 2022. As PUP recipients go on to the €203 rate in each phase, they will be transitioned to standard jobseeker terms.
For more information on how PUP received in 2021 is taxed see the Revenue website.
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