CHANGES TO ILLNESS BENEFIT TAX TREATMENT

Tuesday 24th, October

Posted on : Tuesday 01st, July 2014

Below we set out the changes to Illness benefit treatment.

Changes to the treatment of taxable Illness Benefit paid to PAYE employees by the Department of Social Protection (DSP)

Employers, agents and payroll practitioners should note that, with effect from 1 January 2012, all taxable Illness Benefit paid to PAYE Employees by the Department of Social Protection (DSP) is to be included with taxable pay.

From the same date, the option to manage such payments by reducing Tax Credits and Tax Cut-Off Points no longer applies.

The 2012 P60, P35L and P35L/T will be revised to show taxable pay inclusive of taxable Illness Benefit and a new dedicated field for taxable Illness Benefit. Revenue’s ‘Employers’ Guide to PAYE’ has been updated to reflect this change.

Note: Illness Benefit remains exempt from USC and PRSI.