Pup reduction in 2021?

My understanding is that the tax on 2020 PUp will be spread over the next few years but for the 2021 tax year they are calculating (for the mean time) that your spouse will be on PUP for the entire year and are adjusting your tax credits on that basis for eg. Your tax credits will be reduced by 20% of 350x52 ie. the tax due on the PUP for the entire year and reducing your standard band by 350x52. Its messy the way they have done it and pretty scary when you see your tax allowance surely they could have set up a temporary system where department of social protection became a temporary employer and payed out 350 through a computerised payroll

I am the same here. The tax credit cert I received yesterday- I was fully employed all last year and still, no benefit for me. My husband on PUP some time last year and still. The tax rate. And reduced by 18200 and his tax credits taken away.
What’s the solution to it? Based on what they send us I’ll be paying 3 times more taxes now. Why my income affected if he was on pup, not me. Also would it be more beneficial if we separate assessed for this year? I don’t really know how to work it out. Another thing is he won’t be on pup all this year- payment stops end of March and he will def be back working this year. Why have they calculated 18200 pup for all year if this payment stops soon.
I submitted enquirers on revenue.

I’ll be calling them tomorrow too,
My husbands wasn’t issued any tax bill for last year means he wasn’t due any tax back for revenue because he simply didn’t earn much, after claiming all adoption all income including PUp we were actually refunded overpaid tax.
Can’t imagine being taxed this year based on what they isles on Friday. I hope it’s a mistake they’ve made or their system generated.

There are a number of factors to all of this as has been pointed out before in earlier posts.

1) PUP is taxable in real time in 2021. This is now the same as other benefits such as illness or maternity benefit, but it was different in 2020 where PUP was not taxed in real time but only at year end.

2) When you are receiving a taxable benefit Revenue will predict your liability based on a full year and reduce your tax credits accordingly. Usually this does not make a difference as you are not at work.

3) PUP is significantly higher than most other benefits with a maximum rate of €350 per week. Job Seekers for example is €203. This has an impact on the calculation because tax at 20% on PUP is €70 per week (€350 @ 20%). This is higher than a single persons tax credits, causing them to be reduced to zero. This does not happen with Job Seekers where the liability would be €40.60 per week.

4) Social Welfare use a Week which runs from Friday to Thursday, and if you are eligible for one day you receive a whole week of the benefit. So lets say that you started back to work on Monday and you closed your claim with welfare, you will still get a full week of PUP for this week as you were not working the previous Friday.

5) Social Welfare only tell Revenue that the benefit has closed after the last payment has been paid, and currently they only tell Revenue once per week (at the weekend) when a claim is closed.

6) When Revenue are notified that a claim is closed they will then recalculate the tax due based on the actual amount of PUP (not the full year) and your tax credits will be adjusted to reflect the actual amount of tax due. This should bring your credits back up from zero - but not up to their full value.

7) It might take a couple of weeks for all of this to happen after you have returned to work, but while your credits may be zero for a couple of weeks most people will still be receiving a PUP payment after they have actually gone back to work - its a timing issue

Hope this helps to explain some of the problems that people are seeing

Hi,

I’m in the same boat I think. On a week 1 basis and have no tax credits for the year. Rang the revenue and they said the department of social protection only send out the details once a week and once they receive the information they will update my tax credits and I’ll get a new email with the tax credits. On the form I got last week anything over 18,000 is taxed at 40%. Hoping they get it fixed ASAP.

c-90 wrote: »

Hi guys, I got an amended tax credit certificate yesterday to see my tax credits for this year were reduced by 2,600 for my wife’s pup. Our first PAYE rate has been reduced by 13000 also.

Was I wrong to think this would not be applied until 2022? And she earned under 16500 in total for 2020 and is in line to earn less this year at the rate of pup she’s receiving.

What am I missing as everything I can find online indicates that this would not be payed until 2022 (or at all at her income)

Tia.

The reduction of Tax Credits and Standard Rate Cut-off Point SRCOP - is in respect of Taxing the Pandemic Unemployment Payment PUP in real time for 2021. Revenue are reducing credits and SRCOP for the estimated amount of PUP for the full year e.g. for someone on 350 per week Tax credit is reduced by €3,640 and SRCOP is reduced by €18,200.
When the person returns to work, they must sign off the PUP on the 1st day they return to work through their MyWelfare Account. The Dept. of Social Protection - DSP on receipt of this notification will cease the PUP payment and inform Revenue of the total amount of PUP earned in 2021 (i.e paid to the recipient after 13th January 2021. Revenue will update the persons Tax Credit Cert by reducing Tax Credits and SRCOP by the amount that was paid in 2021 after 13th, January.
This is an ambitious process and could not have been done 3 years ago pre-PAYE modernisation. There is a lot of credit due to those working at Revenue and DSP for the effort they have put in over the past 10 months to deal with record numbers of people in receipt of TWSS and PUP. The process currently in place is ideal for the type of people that would try to take advantage of already stretched resources within the DSP by not signing off the DUP after returning to employment. DSP will not be aware they have ceased PUP and they will be taxed in excess of 20% on all of their income. Neither Revenue, DSP nor BPPM have any sympathy for whatever punitive actions are taken against such people.
That said BPPM is not confident that this ambitious process will work for the vast majority of PAYE workers who return to work and sign off the PUP on the day they return to work. Unfortunately, conditions are not ideal for such an ambitious process, because workers within Revenue and DSP are still people, with the same fears and worries about contracting the virus as anyone else. I expect many of them have had to self isolate because of been close contacts and I expect some of them have or have had the virus. Many of these workers maybe be working from home in conditions which may be less than ideal. The downside to this process for the vast majority of PAYE workers who return to work and sign off the PUP on the day they return to work is that they will be taxed in excess of 20% on all of their income if there is any delay in notifications between DSP and Revenue of the actual PUP earned in 2021. BPPM certainly hopes that such a situation does not arise as people returning to work after been on the PUP will already be financially stretched.


The reduction of Tax Credits and Standard Rate Cut-off Point SRCOP - is in respect of Taxing the Pandemic Unemployment Payment PUP in real time for 2021. Revenue are reducing credits and SRCOP for the estimated amount of PUP for the full year e.g. for someone on 350 per week Tax credit is reduced by €3,640 and SRCOP is reduced by €18,200.
When the person returns to work, they must sign off the PUP on the 1st day they return to work through their MyWelfare Account. The Dept. of Social Protection - DSP on receipt of this notification will cease the PUP payment and inform Revenue of the total amount of PUP earned in 2021 (i.e paid to the recipient after 13th January 2021. Revenue will update the persons Tax Credit Cert by reducing Tax Credits and SRCOP by the amount that was paid in 2021 after 13th, January.
This is an ambitious process and could not have been done 3 years ago pre-PAYE modernisation. There is a lot of credit due to those working at Revenue and DSP for the effort they have put in over the past 10 months to deal with record numbers of people in receipt of TWSS and PUP. The process currently in place is ideal for the type of people that would try to take advantage of already stretched resources within the DSP by not signing off the DUP after returning to employment. DSP will not be aware they have ceased PUP and they will be taxed in excess of 20% on all of their income. Neither Revenue, DSP nor BPPM have any sympathy for whatever punitive actions are taken against such people.
That said BPPM is not confident that this ambitious process will work for the vast majority of PAYE workers who return to work and sign off the PUP on the day they return to work. Unfortunately, conditions are not ideal for such an ambitious process, because workers within Revenue and DSP are still people, with the same fears and worries about contracting the virus as anyone else. I expect many of them have had to self isolate because of been close contacts and I expect some of them have or have had the virus. Many of these workers maybe be working from home in conditions which may be less than ideal. The downside to this process for the vast majority of PAYE workers who return to work and sign off the PUP on the day they return to work is that they will be taxed in excess of 20% on all of their income if there is any delay in notifications between DSP and Revenue of the actual PUP earned in 2021. BPPM certainly hopes that such a situation does not arise as people returning to work after been on the PUP will already be financially stretched.

BPPM wrote: »

Yea. All the certs with reduced credits and reduced SRCOP are on WK 1

Should this take long to fix. I’m waiting over a week now.

All certs will be on a week 1 basis when you start back to work after being on PUP, usually with zero (or very small) credits and a reduced standard rate cut off point.

It can take anything for one to three weeks for the Department of Social protection to inform Revenue that your PUP claim has been closed.

When Revenue have been informed they will recalculate your tax credits based on the amount of PUP that you received, so your credits will be increased from zero, but less than they were at the beginning of the year - this essentially pays the tax due on the PUP.

However, you will continue to be taxed on a Week 1 basis for the foreseeable future - possibly even the rest of the year.

i know that Revenue are looking to see if they can move people back onto a cumulative basis, but this requires some software development in ROS and they are investigating this at the moment.

Ok, here is what happens when you first start back to work after being on PUP and before revenue are informed that your PUP claim has been closed

A single person with no kids has a Standard Rate Cut off Point (SRCOP) of €35,300 per year. See the Revenue Website here>>

So anything above that is taxed at 40%

If Revenue have reduced your SRCOP by €18,200 (€350 * 52) then you will pay 40% on all earnings above €17,100 (€35,300 - €18,200)

On a weekly basis that means that any pay above €328.84 will be taxed at 40% (everything up to that will be taxed at 20%)

Parking Fine 11 wrote: »

What does this mean tax wise? I’m due to be paid this week. Should I accept that I will be losing close to 40% of my pay as anything over 18,000 is being tax at that as per my tax credit cert

If you are married then the SRCOP is €44,300 and on a weekly basis you will pay 40% on any earning above €501.92

This is the situation until Revenue are notified of your PUP claim being closed at which stage they will recalculate your tax credits and SRCOP based on the amount of PUP you actually received.

Just got my amended tax cert for the year. If I’ve over paid on tax this pay run will I automatically get it back in the next or do I need to wait until the end of the year?

collsoft wrote: »

You wont get any tax refunds while you are being taxed on a "Week 1" basis - its just the way the calculations work.

If Revenue switch you back to a "Cumulative" (sometimes called "Ordinary") taxation basis then you will be refunded any over payments.

Normally you would stay on a "Week 1" basis until the end of the year after coming off social welfare, but I know that Revenue are working on a solution that will enable them to put you back onto a "Cumulative" basis but they don't have a timeline for that as yet

Really appreciate the info and the update.

Will there be any other impact to my taxes that I am on week 1 basis?

Just want to ask on this because I'm clueless, so hoping someone can help.

Had my first paycheck since being off the €350 PUP and like others, my Tax Credits are completely gone.

The paycheck gave me a fairly big fright.

Gross: €2537
Net: €1412

Net generally goes between €1850 and €1900

Any ideas on this? Will this be what I can expect now the rest of the year etc?

Thank you

ari101 wrote: »

No, you should go back up once the PUP claim is officially closed and SocWelfare tell Revenue. Not sure the exact time frame. At the moment for the weeks/months you will be underpaid (over taxed) until new cert issues. Looks like you may have to wait to get the extra for these weeks/months (or some of it) back as everyone goes on week1/month1 at the moment.

Thank you. That softens the blow at least.

Think the overtax will be back paid or is that that?

Thanks all. A relief.

Taxation of PUP received in 2021
The DSP informs Revenue on a weekly basis of the amount of taxable PUP paid to each recipient. Then:

any tax due is collected by reducing the person’s tax credits and rate band. To do this, Revenue ‘annualises’ the weekly amount of PUP. This is calculated by multiplying the weekly amount by 52. The annual tax credits and rate band are reduced by this amount.
the adjusted tax credits and rate band are applied on a week 1 basis.
the revisions are shown on the employee’s Tax Credit Certificate (TCC). A revised Revenue Payroll Notification (RPN) is made available to their employer.
In most cases, there will be no additional tax liability at the end of 2021.

Joint assessment
You may be taxed under Joint assessment. If you have insufficient tax credits for this reduction to apply, your spouse or civil partner’s tax credits will reduce.

Sorry to be bringing up an old thread, but have a quick question...

Friend of mine was let go from their job on 2nd of January and returned on the 10th of April, during their unemployment they received the PUP payment. They got €300 a week for 15 weeks, totalling to €4500 in PUP payments altogether. Since returning to work, they are now taxed on a Week 1 basis but their credits or cut-off point haven't changed.

What is confusing them however is, while the PUP payment is listed as a payment on their revenue account, it shows as a total amount of 0 (see attached screenshot). Why is this? Has anybody else had this issue?