Tax on PUP

There are no stupid questions - only stupid answers!

Im not sure if your question relates to PUP received in 2020 or 2021.

I am going to assume you are talking about 2021 because any PUP in 2020 will have ben taxed in your Year End Statement Of Liability (fancy new name for the old P21)

Basically, when you are on PUP your tax credits and tax bands are reduced based on the assumption that you will receive it for a year. For most people this will reduce their credits to zero and their tax band by €18,200 and you will be put on a Week 1 basis.

When you recommence employment and close your PUP claim Revenue will re-adjust your credits and tax band back to what they were before, but you will still be taxed on a Week 1 basis.

Depending on your tax credits and your pay when you go back to work you should not really owe any tax on the PUP at the eyar end - in fact, you might actually be due a tax refund.

If for example you started back to work around the 12th April and were on a salary of €750 per week you would end up with a tex refund of over €500 at year end.

If you are on €1000 per week then that refund would be just over €1000.

This is assuming that Revenue keep you on a Week 1 basis until the year end.

If Revenue were to put you on a cumulative basis and reduce your credits based on the amount of PUP received this could have a big impact on your wages for a few weeks, but then it would settle down and you would finish the year balanced.

Revenue have posted a video on their YouTube Channel that helps to explain the process.

It is aimed at the construction industry, but the principles are still the same.

https://www.youtube.com/watch?v=S3RNq2zTgFA

Hope that helps a bit,

Jason