Taxation of the Pandemic Unemployment Payment (PUP) in 2020

Taxation of PUP received in 2020

During 2020, the payment of Pandemic Unemployment Payment (PUP) from the Department of Social Protection (DSP) was not taxed on receipt. This ensured that individuals could register for, and start to receive, PUP payments as quickly as possible.

In September 2020, Revenue stated that PUP tax liabilities would become due at the end of 2020.

The tax liability could be:

• collected interest free by reducing the employee’s tax credits over four years, starting in January 2022
• or
• where the liability is partially paid, the balance could be collected interest free over four years

Note

All future refunds will be offset against any underpayment of tax due, or owing, under PUP, until it is fully collected.

In January 2021, Revenue made a Preliminary End of Year Statement available to you. Your Preliminary End of Year Statement shows:

• detail of any income received and reported by your employer or employers
• the total amount of PUP you received
• a preliminary calculation of your Income Tax (IT) and Universal Social Charge (USC) for 2020
• whether your tax position is balanced, underpaid or overpaid, for the year.

What you need to do

You have an opportunity to bring your tax affairs up to date. You can do this by completing an Income Tax Return to:

• declare any additional income
• and
• claim any additional tax credits due such as qualifying health expenses or Remote Working Relief.

The additional information that you provide may impact your final IT or USC position.

What happens if you owe IT or USC?

You can either fully, or partially, pay any IT or USC liability through the 'Payments/Repayments' facility in myAccount.

Alternatively, Revenue will collect the full, or any remaining, liability interest free. This is done by reducing your tax credits over four years (2022 to 2025).

The reduction of tax credits started in January 2022.