Illness benefit and tax credits

jaffa20

Hi all,

Is it correct that illness benefit should reduce tax credits? I was on sick leave for 1 week and claimed illness benefit as required in my employment, mandating the payment to my employer. I didn't receive any of the illness benefit but received full pay as normal from my employer.

This week I received a new tax credit certificate, reducing my tax credits because of the illness benefit payment. It's not much because it's only 1 week. I'm not sure if this is correct or if I should query it with revenue or payroll section.

Thanks

shmeee

https://www.boards.ie/discussion/2058258766/illness-benefit-and-tax-credits

The above is correct.

IB and any other DSP payments are taxed in real time by a reduction in your tax credits in the current year.

A new tax cert will issue with reduced credits and you may notice you are now on a Week 1 / Month 1 tax basis. If you wish to change to a cumulative tax basis, you will need to contact Revenue via MyAccount or the PAYE helpline.

If its processed through pay, it should show as a plus and minus. This reduces your pay which is liable for tax

Stops you being taxed twice

jaffa20

I'm not sure it was processed through pay. At least it doesn't show on my payslip. Revenue have it as income on my ROS as paid to me, but that doesn't seem right. Essentially, I thought I wouldn't be at a loss at all. If my tax credits are reduced, then so is my income.

shmeee

https://www.boards.ie/discussion/comment/119490457#Comment_119490457

Your not at a loss. All earnings are taxable, IB is taxed by your credits being reduced. You're only taxed on the "top up" amount your employer pays on top of your IB.

Example: €500 per week gross pay, employer gets the €208 IB. You are taxed on €292 only as the €208 IB is taxed by your credits getting reduced. Your not double taxed.

Hope that makes sense.

The above is confirmed on

https://www.revenue.ie/en/employing-people/taxation-of-social-welfare-payments-illness-benefit/pay-employee-receiving-ib.aspx

https://www.revenue.ie/en/jobs-and-pensions/taxation-of-social-welfare-payments/illness-occupational-injury-partial-capacity-benefits.aspx

jaffa20

Thanks, maybe it will sort itself out over the coming weeks. I'm paid weekly and was definitely taxed more than usual.