Whereabouts on form 11 should the 2020 PUP amount be listed?
I don't understand how there could be a standalone tax liability on PUP; if a recipient is on the higher rate of €350 from April to December(c.39 weeks) it would amount to €13650, which in itself would be fully offset by individual tax credits?
Its because a sizeable chunk of those who received the PUP, will have either a tax & usc liability, or both.
The PUP was paid out, without taking into account someones PAYE or USC liabilities and they were put in a week 1 tax basis, to prevent a repayment of tax/usc on unused tax credits, or weekly/monthly usc limits.
Tens of Thousands went back to fulltime work over the summer. In the interest of fairness, revenue/government have decided to allow any liabilities due on the PUP, to be repaid over 4 tax years, starting in 2022 to 2025 inclusive, or, a tax payer can choose to pay the full balance due in 2021, if they so wish, once those statements are issued next week, Jan 15th.
To your specific point,you are correct, a persons “normal” tax credits will largely offset the PUP PAYE liability in most cases, allthough, there are many scenarios where this will not be the case, but there will still be a USC liability on the PUP payments, which has not been applied to a tax payer.
Some of the scenarios, where a tax payer who received max €350 PUP for an extended period, would actually have a PAYE liability include:
Where an employee is paying into a DC Pension scheme, and was laid off for 6 months or more. They would have 40% tax relief in the early months of 2020 on their pension contributions, and also probably in the final months of 2020, however, when their total income is added up for the year to include the PUP, their total 2020 income may be such that, some of the available 40 % pension relief may not be available, as their total income subject to 40%, may be lower than their pension contributions,this is more likely to happen if employees put large bonusses paid out in first few months of 2020 into AVC’s
Tax relief is based on a calendar year in totality, not a weekly or monthly period.
Another example would be, a tax payer, who had for some reason, reduced tax credits at the start of 2020, which can happen if a 2019 liability was not settled, and the amount owed gave rise to a reduction in tax credits for 2020.
Where a married couple transfer all their credits (except PAYE tax credit) to the other spouse, and the spouse with the reduced credits, received PUP payments at the max, for an extended period, there maybe a PAYE liability, as their reduced credits would not be enough to cover the PAYE liability on the PUP at max rate of €350.
There are other scenarios as well