Taxation of certain social welfare payments received by employees

Taxing illness, occupational injury, and partial capacity benefits

Since 1 January 2018, employers should not amend employees’ pay in order to collect the tax due on Illness Benefit payments. Revenue now collect any tax due on these payments by reducing an employee’s tax credits and rate bands by the amount of Illness Benefit received. Illness Benefit payments are not liable to Universal Social Charge (USC) or Pay Related Social Insurance (PRSI). The employee's USC rate bands will not be amended. 

Details of the Illness Benefit claim are sent by the Department of Social Protection (DSP) directly to Revenue. We will issue an updated Revenue Payroll Notification (RPN) to the employer. 

References to Illness Benefit on this page can be assumed to also mean Occupational Injury Benefit and Partial Capacity Benefit. The taxation of these benefits is similar.

Note

The information in this section refers to current employer obligations. For employer obligations before 1 January 2019, please see the Employers' Guide to PAYE.

Next: How to pay an employee who is receiving Illness Benefit

Published: 21 May 2026 Print this page

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