Taxable Social Welfare - arrears paid

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Mrs Vimes

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I have been in receipt of a taxable social welfare payment for a number of years.

It was discovered this year that I had been underpaid all along.

There were arrears of approx 10,000 due which were paid in 2025.

If all 10k is included in my 2025 tax return it will be taxable whereas I had unused tax credits for each of the previous years in which it should have been paid.

Can I include only the portion which should have been paid in 2025 in my 2025 tax return and redo my previous returns or is it just "tough luck"? If I can, do I need a statement from Social Welfare detailing which years or can I calculate it myself?

Also, why do Social Welfare just say: This is your payment, appeal if you want rather than detailing where they got their figures so that you can see whether you should appeal? In my case it would have been immediately obvious that they were incorrect and I really could have done with the money at the time (one child was omitted from qualified child allowance for years).

Thanks as always for any info.
 
The official Revenue rule is: Income Tax is due based on the date you receive the payment.
The people you are dealing with are probably clueless as to how the figures are derived. Appeal the decision all they can advise.
 
Tough luck as you mentioned unfortunately

You got the money in 2025 so it's declared as part of 2025

Same as payroll, it's not when money was earned/due but rather paid
 
Did Social Welfare make the error. "It was discovered" by whom? Would that make a case for a review or discussion
 
@Marsupial I'm getting Carers Allowance for one child (I will call her Ava) and increase for qualified child for my other children. When it was awarded I assumed the figure was made up of the Carers plus increase for the other children (not including Ava).
If they had spelled out the breakdown I would have realised that the increase was being paid for Ava and it was another child which they had left out.

@Black Sheep Yes, Social Welfare made the error, just omitted one of the children from the original calculation. It came to light when they requested proof that Ava and I realised that I was getting an increase for her all along and rang them to ask for a breakdown.
 
Mrs Vimes said:
When it was awarded I assumed the figure was made up of the Carers plus increase for the other children (not including Ava).
If they had spelled out the breakdown I would have realised that the increase was being paid for Ava and it was another child which they had left out.
Click to expand...

Never assume, always better to check!

But it's ridiculous that DSP doesn't send out a breakdown of how (a) the weekly payment is made up and (b) how the arrears (if any) have been calculated.

It's something that the likes of the Citizens Information Board and other similar quangos really should be insisting on.

If you've the time and are annoyed enough about your unfair treatment maybe you could contact a local TD about it.
 
Make an appeal. State the grounds of the appeal that, as a result of negligence by DSP, you have suffered a financial loss.

Explain how the financial loss has occurred.
Ask them to find a solution to compensate for your financial loss. Suggest that this could be either a goodwill payment, or rescheduling the arrears to span a number of future tax years.

This could be possible if you refunded the lump sum overpayment back to DSP.
 
@Mrs Vimes I'm so sorry to hear you seem to be stuck in the middle of a number of the bureaucratic nonsenses our poor country is infamous for.

1. Have you made any tax returns for the last 4 years? If you haven't you may be owed tax refunds so could I suggest you get working on 2021 ASAP. You can get help in here if you're unsure what steps to take.

2. Can DSP give you a breakdown of when the backdated payments should have been paid by tax-year (Jan - Dec)? If they can, use these figures as undeclared income for each of your annual tax returns in 1.

Worst case you may be owed some tax money to reduce the tax impact on some of your back-dated payment.

It's insane that one bunch of faceless unaccountable public servants underpay you and then when they rectify their stupid mistake another bunch of them take a load of your entitlement back from you through no fault of yours.

If none of this works, please follow the excellent suggestions for the appeals processes above.

The best of luck.
 
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@mathepac Thanks for the kind words.

I have made tax returns each year as my husband and I are both self-assessed.

What I'm thinking of doing now is making one-off pension payments for both of us. This would need to be done before year end so that it can be deducted for SUSI purposes in 2026/27 college year (hopefully will have 3 in college next year so would make a big difference if they can qualify).

Our income has (finally) improved in the last year or so but as the means test for Carers has increased I still qualify.

Would anyone have advice on how to start a pension with a one-off payment?
 
Mrs Vimes said:
Would anyone have advice on how to start a pension with a one-off payment?
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Contact a broker. They will send you the application forms.
You can choose a once off lump sum payment in the form.
Then sent a cheque or make an electronic payment directly to the pension provider company.
 
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