Do I have to pay tax on my COVID-19 payment?
If you receive the COVID-19 Pandemic Unemployment Payment, you will be taxed on it in real-time
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Many people who lost their jobs or had their hours reduced as a result of the COVID-19 pandemic received the COVID-19 Pandemic Unemployment Payment. This is a payment to support those who lost work as a result of COVID-19.
What many people don’t realise is that this payment is taxable, which means you may have to pay tax on this income later on. Whether or not you have to pay tax on it will depend on your overall income during the year.
How is the tax on the COVID-19 payment paid?
If you are working for an employer, your tax is usually deducted every time you get paid, which means you are paying your tax as you go throughout the year.
In 2021 and 2022, PUP is treated like other taxable social welfare payments. It is taxed in real-time. This means it is taxed as it is paid. The tax due is collected by reducing your tax credits and rate band. Tax credits are used to reduce the amount of tax you pay. The more tax credits you have, the less tax you will have to pay.
This means that to pay the tax back, the amount of tax deducted each time you get paid from work will be slightly higher than normal. Instead of paying all the tax you owe at once, you will pay it over time.
How much tax do I have to pay on my COVID-19 payment?
There is no need to worry about receiving a big tax bill at the end of the year. The amount of tax you have to pay is not likely to be a high amount, and it will be deducted from your income gradually over time, instead of all at once.
Which COVID-19 related payments are subject to tax?
The following payments are subject to tax, which means you may owe tax to Revenue later this year if you are getting any of these payments:
- The COVID-19 Pandemic Unemployment Payment
- Illness Benefit
The Supplementary Welfare Allowance is not subject to tax.
Feeling stressed or overwhelmed?
Dealing with tax can be stressful, but there is no need to panic. If you are feeling overwhelmed by this situation and you want to talk:
- Get anonymous support 24/7 with our text message support service
- Connect with a trained volunteer who will listen to you, and help you to move forward feeling better
- Text SPUNOUT to 50808 to begin
- Find out more about our text message support service
Need more information, advice or guidance?
We offer information, advice and guidance about the issues that matter to you. Our online Youth Information Chat service is for 16 to 25 year olds and is available Monday to Friday, 4pm to 8pm (excluding Bank Holidays).