Do I have to repay tax from Illness benefit?

I am on Illness Benefit for over a year now and I know it is taxable source of income. My concern is I will not be able to go back to work anytime soon, I'd say for another year or so and I don't want to end up with a huge tax return at the end of my claim, how does it work? Should I repay that tax every year?

Who is paying the Illness benefit ? Is it the company or the State or both ?

Only the State is paying my Illness Benefit.

It's only taxable if your earnings over the year is over the taxable threshold afaik. So say you got paid between Jan and March and then got IB for 6 months and got paid the last 3 months again then revenue will add the IB received to your gross pay over the year i.e. 3 months pay plus IB for 6 months and 3 months pay.. In your case I presume you have no other income in the years affected. When you go back to work in that year you will be taxed over the year and not hit with a bill, in fact they will probably just adjust your tax credits.

What if I would never go back to work? Is there a tax credit in place I can use towards this unpaid tax? To my knowledge Im taxed at 20%, is that correct?

If that is your sole income for the year then you wouldn't be earning enough to pay tax, you'll get the normal personal tax credit and the paye one as well. You get the paye credit if you are receiving a taxable social welfare benefit.

Thanks, thats a good news. What is the tax free earning treshold for 2017?

There is no tax free threshold as such, all income is taxable but then you minus off your credits off the tax bill. But effectively that means that even with just the basic credits of personal and paye that is 3,300 against any tax chargeable.

So that 3,300 applies to Illness Benefit deducted tax and should easily cover it?

Easily if benefit is only income in tax year, in fact you won't even get the full paye allowance if you aren't liable for enough tax to use it all up.