Taxation of Illness Benefit


New Member

I have reviewed revenue website however I don't see a clean answer.

So last year I received 500 in Illness benefit, my tax certificate was updated and my tax cutoff has been reduced by 500 and Employee Tax Credit reduced by 100 ( 20% of 500 IB)

This seems to me that I pay 20% tax on Illness Benefit, is this correct or how should it be managed

Thank you in advance for any assistance


That is correct. It is deemed income over the year by revenue so you get taxed on it.

Just Retired

Registered User
Yes it is correct, Illness Benefit is subject to P.A.Y.E. Tax, But to PRSI or USC.
I assume you were not paid(Salary,Pay or Wages) by your employer for the period of the benefit. In order for the Tax on Illness benefit to be collected through employers payroll, Revenue will issue an adjusted cert. which reflects the amount of illness benefit paid to you. For a Single taxpayer,S.R.C.O.P (Standard Rate Cut off Point) €35,300.00c less €500.00c= €34,800.00c (by reducing the band you may reach the higher Tax Rate of 40% earlier) Tax Credits (Personal + P.A.Y.E.) €3,300.00c Less (€500.00c x 20%= €100.00c) so now tax credits are €3,200.00c. Less Tax Credits means more Tax.
In order that correct tax is deducted,this cert is issued for the following complete tax year, i.e. Illness benefit paid in year 2018 adjusted tax cert made out for tax year 2019. Most if not all payroll systems can capture illness benefit as you receive it,so illness benefit transferred to employer, you receive whilst out of work the benefit, taxation through employer's payroll i.e. applying SRCOP & Tax credits as normal, should ensure correct deductions etc.
If you employer pays you your full entitlement for the period of your illness, then there is a different situation. I hope this helps.