Important changes to taxation of Illness Benefit from 1 January 2018

Important changes to taxation of Illness Benefit from 1 January 2018

Currently employers and pension providers are required to include with taxable pay all taxable Illness Benefit and Occupational Injury Benefit payments paid to employees by the Department of Employment Affairs and Social Protection.

With effect from 1 January 2018, this will no longer be the case. From that date Revenue will incorporate the taxable element of Illness or Occupational Injury Benefit into employees’ tax credit certificates. This will have the effect of reducing employees’ available tax credits and rate bands. Their USC rate bands will not be affected.

From 1 January 2018, DEASP will cease issuing Illness and Occupational Injury Benefit notifications to employers. These notifications were issued to employers to assist them in calculating their employees’ tax deductions. As the tax due on these payments will be collected by reducing employees’ tax credits and rate bands employers will no longer require these notifications to calculate their employees’ tax deductions.

The Revenue website has been updated to reflect this change.

 (Source: www.revenue.ie )

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