Taxation of the Pandemic Unemployment Payment (PUP)

  1. Overview
  2. How PUP received in 2020 is taxed
  3. How PUP received in 2021 is taxed

How PUP received in 2021 is taxed

In contrast to the year 2020, PUP is taxable in real-time during 2021. (This means you are taxed when you are paid.) PUP payments earned in 2021 are treated like other Department of Social Protection (DSP) taxable payments.

This process ensures tax is collected on the payment at the right time and limits any additional liabilities at the end of the year.

Taxation of PUP received in 2021

The DSP informs Revenue on a weekly basis of the amount of taxable PUP paid to each recipient. Then:

  • any tax due is collected by reducing the person’s tax credits and rate band. To do this, Revenue ‘annualises’ the weekly amount of PUP. This is calculated by multiplying the weekly amount by 52. The annual tax credits and rate band are reduced by this amount.
  • the adjusted tax credits and rate band are applied on a week 1 basis.
  • the revisions are shown on the employee’s Tax Credit Certificate (TCC). A revised Revenue Payroll Notification (RPN) is made available to their employer.

In most cases, there will be no additional tax liability at the end of 2021.

Joint assessment

You may be taxed under Joint assessment. If you have insufficient tax credits for this reduction to apply, your spouse or civil partner’s tax credits will reduce.

Process when PUP payments have ended

The adjusted tax credits and rate band apply only for the duration of the PUP. They will be readjusted to your normal entitlements after DSP reports to Revenue that they are no longer making PUP payments to you. The processing of these reports from DSP are prioritised by Revenue.

Your responsibility if you return to work

It is important that you inform DSP immediately if you have returned to work. The information can be passed onto Revenue for processing. 

You can find information about how to Close your pandemic unemployment payment application on the DSP website.