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Taxation of social welfare payments

Information

All income in Ireland is generally subject to taxation. Your social welfare payment may or may not be deemed taxable but even if your social welfare payment is taxable, you may not actually have to pay tax on it. Universal Social Charge is not payable on social welfare payments.

If you are getting a social welfare payment you will get a PAYE Tax Credit in addition to your normal tax credits. This means, if a social welfare payment is your only source of income you may not pay tax because your tax liability does not exceed your tax credits. The PAYE Tax Credit is given to the person claiming the social welfare payment and not to the adult dependant. No tax is deducted at source by the Department of Social Protection.

All enquiries about your tax liability should be addressed to your local tax office.

Taxation of Maternity Benefit

From 1 July 2013 Maternity Benefit, Adoptive Benefit and Health and Safety Benefit are taxable. Universal Social Charge and PRSI are not payable. The actual rate of tax you will pay will depend on your personal circumstances and the tax reliefs and tax credits you are claiming. The information given here applies in exactly the same way to Adoptive and Health and Safety Benefit.

The Department of Social Protection (DSP) will continue to pay Maternity Benefit without any deduction of tax. However the DSP will notify Revenue of the amount of Maternity Benefit to be taken into account for income tax purposes.

If you are self-employed and pay your tax through the self-assessment system you should include details of any Maternity Benefit received in your annual tax return (Form 11).

If you pay tax through the PAYE system Revenue will, where possible, automatically reduce your annual tax credits and rate bands to account for the tax payable on your Maternity Benefit. If you pay tax through the PAYE system you will probably fall into one of the following 3 categories:

1. You are paid your full or partial salary by your employer and your Maternity Benefit is paid directly to them

Revenue will reduce your tax credits and rate band to account for the tax payable on your Maternity Benefit and in this way collect the tax due. Revenue will then send a revised tax credit certificate to your employer. Your employer should only deduct tax, USC and PRSI on the difference between the salary paid and Maternity Benefit.

2. You are paid your full or partial salary by your employer and your Maternity Benefit is paid directly to you.

Revenue will reduce your tax credits and rate band to account for the tax payable on your Maternity Benefit and your employer should only deduct tax, USC and PRSI only on the amount of salary actually paid by them.

3. You do not get any salary while on maternity leave and your Maternity Benefit is paid directly to you

Revenue will reduce your tax credits and rate band to account for the tax payable on your Maternity Benefit. They will then send a revised tax credit certificate to your employer. If your only income is Maternity Benefit you will probably pay very little or no tax (since your total tax credits will probably exceed your total tax liability).

If you are not entitled to any pay on the usual pay day, you may contact your employer to request repayment of any tax that might be due. Alternatively, when you go back to work after maternity leave, any refund of tax which may be due can be calculated.

You can read more detailed information and examples of how Maternity Benefit is taxed on Revenue's website.

Maternity Benefit before 1 July 2013

If you were getting Maternity Benefit up to and including 30 June 2013 you may be entitled to a tax and PRSI refund if your Maternity Benefit is paid to your employer and your employer continues to pay your normal weekly wage. If this is the case, when your Maternity Benefit has finished, you can write to the Maternity Benefit Section or contact the Maternity Benefit Section online to request an MB21 Statement, which you should then forward to your tax office to get a tax refund. To get a PRSI refund, you should complete the Refund of PRSI Contributions Application Form and send it to the PRSI Refunds Section.

Social welfare payment and another income

If you have a social welfare payment and another source of income, you may have to pay tax. In this case, your taxable social welfare payment and your other income are added together. You are taxed on the total amount. There is no mechanism for taxing social welfare pensions at source (before it is paid to you). Your non-social welfare income determines how tax due is paid.

For example, you are getting a social welfare payment and an occupational pension. Your occupational pension is taxed through the Pay-As-You-Earn (PAYE) system in the same way as a wage or salary. This means that you get your tax credits in the normal way. In order to tax your social welfare pension, your annual tax credits are reduced by the tax liability on your social welfare pension. You then effectively pay tax on both the pensions, but it is collected from the occupational pension. For higher incomes, the standard rate cut off point will also be reduced. The technical term for this is coding in of credits. The same arrangement applies if you have income from a job and a social welfare pension. If your social welfare pension was not coded in, you would have to pay tax as a self-employed person and in a lump sum by 31 October each year.

If your other source of income is not taxed on the PAYE system, for example, you have an occupational pension from abroad or you have investment income, then you are classed as a self-employed person and your tax is payable annually by 31 October each year.

Social welfare or social security pensions from abroad

If you have a social security pension from abroad, it is also generally taxable in Ireland. The tax is payable annually unless you have a source of income that is subject to PAYE. Certain foreign pensions that would be exempt from tax if you were resident in the country paying the pension, are however also exempt from tax in Ireland.

Rules

Irish social welfare payments

Jobseeker's Benefit is generally taxable, but the first €13 each week is exempt from tax. Jobseeker's Benefit payable to short-time workers is not taxable.

Increases for Qualified Children payable with Jobseeker's Benefit, Illness Benefit and the Occupational Injuries Scheme (Injury Benefit, Disablement Pension and Incapacity Supplement) are not taxable.

Other than the cases above, if your social welfare payment is taxable, any increase in your payment for your adult dependant and child dependants is also taxable.

Child Benefit is not taxable.

Guardian's payments, which are payments made for the benefit of an orphan, are taxable. However a guardian's payment is regarded as the beneficial property of the child and is therefore assessable against their income (if any), not against the income of the person getting the guardian's payment.

Social assistance payments

Blind Pension Taxable
Carer's Allowance Taxable
Disability Allowance Not taxable
Deserted Wife’s Allowance Taxable
Farm Assist Not taxable
Family Income Supplement Not taxable
Guardian's Payment (Non-Contributory) Taxable (on child's income)
Jobseeker's Allowance Not taxable
One-Parent Family Payment Taxable
Pre-Retirement Allowance Not taxable
Supplementary Welfare Allowance Not taxable
State Pension (Non-Contributory) Taxable
Widow’s, Widower’s or Surviving Civil Partner's (Non-Contributory) Pension Taxable

Social insurance payments

Adoptive Benefit Taxable (from 1 July 2013)
Bereavement Grant Not taxable
Carer's Benefit Taxable
Constant Attendance Allowance (payable with Disablement Pension) Taxable
Deserted Wife's Benefit Taxable
Death Benefit Pension Taxable
Disablement Pension Taxable (except for child increases)
Disablement Gratuity (lump sum payment) Not taxable
Guardian's Payment (Contributory) Taxable (on child's income)
Health and Safety Benefit Taxable (from 1 July 2013)
Illness Benefit Taxable (except for child increases)
Invalidity Pension Taxable
Incapacity Supplement Taxable (except for child increases)
Injury Benefit Taxable (except for child increases)
Jobseeker's Benefit and Short-Term Enterprise Allowance Taxable (first €13 per week excluded)
Jobseeker's Benefit (paid to systematic short-term workers) Not taxable
Maternity Benefit Taxable (from 1 July 2013)
State Pension (Transition) Taxable
State Pension (Contributory) Taxable
Widow’s, Widower’s or Surviving Civil Partner's (Contributory) Pension Taxable

Other schemes

The Back to Work Allowance, Back to Work Enterprise Allowance and Back to Education Allowance are not taxable. Payments made by the VEC under the Vocational Training Opportunities Scheme (VTOS) are not taxable.

Payments made under the Rural Social Scheme (RSS), TÚS and the Community Services Programme are taxable.

Payments made under JobBridge, the National Internship Scheme, are taxable if the underlying social welfare payment is taxable. If the underlying payment is not taxable, JobBridge payments are not taxable.

You may get an increase in your social welfare payment, if you are living alone. If your social welfare payment is taxable, then the Living Alone Increase is taxable. If your social welfare payment is not taxable, then your Living Alone Increase is not taxable.

Domiciliary Care Allowance, Fuel Allowance and benefits under the Household Benefits Scheme are not normally taxed.

Page updated: 2 December 2013

Language

Gaeilge

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Contact Us

If you have a question relating to this topic you can contact the Citizens Information Phone Service on 0761 07 4000 (Monday to Friday, 9am to 8pm) or you can visit your local Citizens Information Centre.