Taxation of DSP payments

Taxation of Maternity, Adoptive, and Health and Safety Benefits

Maternity Benefit, Adoptive Benefit, and Health and Safety Benefit (including any increases for dependants) are liable to Income Tax (IT). These payments are not liable to Universal Social Charge (USC) or Pay Related Social Insurance (PRSI).

On this page, all further references to Maternity Benefit can be taken to also mean Adoptive Benefit, and Health and Safety Benefit. The tax treatment for these benefits is similar.

How Maternity Benefit is taxed

The Department of Social Protection (DSP) gives Revenue details of Maternity Benefit payments. If you receive Maternity Benefit and you are a Pay As You Earn (PAYE) taxpayer we collect the tax due.

We will reduce your annual tax credits and rate band to collect any tax due on a weekly basis. To do this, we ‘annualise’ the weekly amount of Maternity Benefit. A notional annualised amount is calculated by multiplying the weekly amount by 52. Your annual tax credits and rate band are reduced by this amount.

Maternity Benefit received is on a 'week 1 basis'. This means the adjusted tax credits and rate band are applied on a week-by-week basis. You can see this on your Tax Credit Certificate (TCC). We will make a revised Revenue Payroll Notification (RPN) available to your employer.

The weekly adjusted tax credit and rate band apply for the duration of the Maternity Benefit payments only. They are readjusted after the last payment is received from DSP.

Full wage received and Maternity Benefit paid to employer

The difference between the wage paid to you by your employer and the Maternity Benefit pay to your employer is subject to IT, USC and PRSI.

'Top-up' wage and Maternity Benefit received

Only the wages actually paid by your employer are subject to IT, USC and PRSI.

Only Maternity Benefit received (no wage paid)

Your employer will be sent a revised RPN available to your employer on a Week 1 basis.

A tax refund may be due to you. As the RPN is on a week 1 basis, your employer cannot make this refund. You should contact your Revenue office to see if we can remove the week 1 basis.

You might be still on the week 1 basis at the end of the tax year. You should submit an Income Tax return available on PAYE services in myAccount and we will review your tax position.

Maternity Benefit claims that span two tax years

You may be on maternity leave that spans two tax years (for example November to April). Maternity Benefit payable in Year 2 is taxed by reducing the tax credits and rate band. We do this on a ‘cumulative basis', from the beginning of Year 2. This means that we spread the tax due on the Maternity Benefit for Year 2 over the full tax year.

Couples taxed under joint assessment

You may not have enough tax credits and rate band to allow collection of the full amount of tax due. We will collect the balance by reducing your spouse’s or civil partner's tax credits and rate band.

Next: Taxable payments you do not need to declare