Taxation of Illness Benefit and Occupational Injury Benefit

Until the end of 2017 employers and pension providers were 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 (DEASP). With effect from 1st January 2018, it is no longer the case. Now Revenue incorporates the taxable element of Illness or Occupational Injury Benefit into employees’ tax credit certificates. This has the effect of reducing employees’ available tax credits and rate bands. Their USC rate bands are not affected. From 1st January 2018, DEASP ceases 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.

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