Social Welfare Benefits

Social welfare payments are divided into two categories one called Social Assistance Payments (most of which are not taxable) and the other Social Insurance Payments ( most of which are taxable).

The following Social Assistance Payments are not liable for tax:

  • Jobseekers allowance
  • Pre retirement allowance
  • farm assist
  • Supplementary allowance
  • Disability allowance

The following Social Insurance Payments are not liable for tax:

  • Maternity Benefit up to 30th June 2013.
  • Illness benefit for first 6 weeks
  • Adoptive benefit
  • Health & safety benefit
  • Job seekers benefit for systematic shortterm workers only
  • Children’s Allowance
  • Death Grant
  • Family Income Supplement

Apart from this all other benefits are liable for tax. The most common ones arising in practice will be Old Age and retirement pensions, Widows Pensions and Unemployment Benefits.
Special rules apply for unemployment benefit. The first €13 per week of benefit is not taxable. In addition Child Dependant Allowance paid with Unemployment Benefit is not liable for tax either. The Shorttime Working Benefit for those who are on a 3day week is exempt from tax.
For those in receipt of Disability Benefit the payment received for the first 6 weeks is not taxable and Child Dependent Benefits paid plus Disability Benefit are not taxable.

Other Schemes/ Benefits not liable for tax are

  • The Back to Work Allowance
  • The Back to Work Enterprise Allowance
  • Back to Education allowance
  • Vocational Training Opportunities Scheme (VTOS)

Other Schemes/ Benefits liable for tax are

  • Rural Social Scheme ( RSS)
  • TUS Community Work Placement Initiative
  • Community Services Programme

If you are receiving benefits that are taxable you are obliged to declare same to the Revenue. No tax is deducted at point of payment. This can lead to substantial tax underpayments for people in receipt of Old Age Pensions. If you have other income e.g. An Occupational Pension, which uses up all of your tax credits then the State Pension is liable for tax in full. Many people are not aware of this and if it is left uncorrected for a number of years a very substantial tax liability can arise.

If you are in receipt of the Old Age Pension you are entitled to the normal PAYE tax credit. This is an important point for people who have been selfemployed all their life and never in receipt of PAYE income. When you start drawing the State pension you are entitled to claim the benefit of the PAYE tax credit.