Tax implications for PUP

[dcr22B]

Hi all,

I'm self employed and coming to the end of my period of benefitting from the Pandemic Unemployment Payment.

In terms of the tax implications, I have been accruing for Income Tax, PRSI and USC on the benefits I have received. I have noticed that there is no Employee PRSI to be paid on the Covid-19 temporary wage subsidy scheme, does this scenario also apply to the Pandemic Unemployment Payment? I have Googled it to bits and I'm no clearer on it.....

 

[lughildanach]

There are no other social welfare payments that attract PRSI or USC liability. I have seen nothing to suggest that the PUP will be any different. But indications at this stage anyway are that it will be taxable.

Briefing on the government's response to COVID-19 - Monday 25 May 2020

Topics discussed in this briefing include the Restart Grant, CLÁR Programme, and Bloom at Home.

www.gov.ie

 

[dcr22B]

Thanks for that, it is what I was thinking from the beginning. I was just looking for concrete proof of it but I guess it's better to be prudent to avoid any potential shocks.

 

[lughildanach]

Thanks for that, it is what I was thinking from the beginning. I was just looking for concrete proof of it but I guess it's better to be prudent to avoid any potential shocks.

It would be no harm to set aside 4% to cover the possibility that they decide to make it chargeable.

If it isn't chargeable, and your chargeable income drops below the 5k threshold for the year, you may want to consider setting aside 500 Euro to make a voluntary contribution for the year. If you are above 5k anyway, there shouldn't be a problem if its not chargeable.

There was talk about credits being issued for those on the PUP. Its not clear how that would work for the self-employed, as they don't usually receive credits, but this is only a problem for those who don't have other chargeable income of over 5k. To be honest, I don't think they have fully worked out the PRSI implications yet. There could be serious problems created over the next couple of years for people who would have been relying on paid contributions this year. One relatively easy way to resolve those issues would be to make the PUP chargeable. So even though there have been no indications yet that this will happen, I wouldn't entirely rule it out.