The Pandemic Unemployment Payment (PUP) is taxable in real-time in 2021. This means that there are tax implications for workers returning to work after being on the PUP for the last number of months. The worker is allocated zero tax credits on a week one basis until the Department of Social Protection (DSP) exchanges information with Revenue confirming that the worker’s PUP claim is closed. At that point, Revenue will issue a revised Revenue Payment Notification to the employer reinstating the employee’s full tax credit and rate band on a week one basis.

The worker should close his/her pandemic unemployment payment application on the DSP website on the first day he/she returns to work. It will take at least two weeks for the DSP to issue Revenue notification that the worker is no longer claiming the PUP. When Revenue has the relevant notification, it will then issue an updated RPN to the employer. Employers should avoid running payroll in advance of the pay date for the purposes of working off the most up to date RPN which gives the worker his/her full credits on a week one basis. A full example with dates and timelines is set out in a presentation by Revenue.