Revenue eBrief No.103/17

13 November 2017

Taxation of Illness Benefit and Occupational Injury Benefit payable by the Department of Employment Affairs and Social Protection (DEASP)

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 (DEASP).

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.

Changes to Form P45 for 2018

The paper Form P45 will be updated for 2018 to remove all references to Illness Benefit.  The updated paper P45 will be available to non-ROS employers from early December 2017 and can be ordered from: Email: custform@revenue.ie.

The ROS version of the P45 is not changing for 2018.  Where a user inputs a figure in the Illness Benefit field a pop-up message will advise that this field may only be populated if the cessation date is before 1 January 2018.