Entitled to a welfare payment? Here are the benefits you won’t have to pay tax on

Be wary of the benefits that are still subject to income tax

Yes you might still have to pay tax on your state pension - if you earn enough - but there are welfare payments that aren’t liable to tax.

Yes you might still have to pay tax on your state pension - if you earn enough - but there are welfare payments that aren’t liable to tax.

 

Remember the outcry that ensued when Revenue declared that pensioners could face tax bills on their state pension payments?

Yes, when you receive a welfare benefit from the Department of Employment Affairs and Social Protection, depending on your income, you could find that this is subject to income tax (universal social charge and PRSI typically don’t apply to social welfare payments).

But not all welfare payments are treated the same, and before Christmas, Revenue clarified the welfare payments you can receive without ever being subject to income tax on the benefit. This follows an amendment in Finance Act 2018, which sought “to put beyond doubt” that certain welfare payments are exempt from tax.

So what payments must you pay tax on? And which are exempt?

Payments liable to tax

So let’s look at the ones you must pay tax on first. As we know clearly know, if you get the state

pension

Tax also applies - where the income is high enough - to

c

arer’s allowance

A host of

parental related benefits

And if you’re looking for work but have income from other sources, you could find that you end up paying tax on

jobseeker’s benefit

As some of these payments (such as the state pension) are paid directly to you, the onus is on you to notify Revenue and declare this income. The DEASP notifies Revenue of other benefits, such as maternity and invalidity pension, so you don’t have to do anything for these as Revenue will work out tax owed.

Tax-exempt payments

To avoid confusion as to which payments should be liable to tax where appropriate, and which shouldn’t, Revenue has now published a list of tax free welfare payments.

These include a number of allowances, including the basic supplementary welfare; back to education; back to work; back to school; constant attendance; direct provision; disability; domiciliary care; fuel; rent; jobseeker’s ; and telephone support.

Death benefit for funeral expenses is also included, as is the farm assist payment.

While the living alone allowance is liable to tax, the household benefit package, which covers a TV licence and fuel allowance, is worth up to €580 a year, is not.

In addition, you won’t have to pay tax on a training support grant, urgent needs payment or the working family payment.

You can see the full list here.