Monday 12 April 2021 was a day that gave cause for cautious optimism, as the Government began loosening restrictions and reopening the country. Provided COVID-19 numbers remain subdued over the coming months, many employees that have been relying on Pandemic Unemployment Payments (PUPs) since December 2020 can begin to return to work.
Our blog post today is aimed at informing you on the process and what is required of you and your employees when making this transition.
Returning to Work
The very first thing that your employee needs to do on the date that they return to work is close their PUP claim on the DEASP website.
Until this is done, the process to change the employee’s RPN cannot begin and so will result in them paying more tax. The process is as follows:
- Your employee closes their PUP claim on the DEASP website.
- DEASP will make the last PUP payment due to your employee, before closing the claim on their system and informing Revenue.
- On receiving the information for DEASP, Revenue will update your employee’s tax credits in line with the amount received through PUP, before creating an updated RPN on a week 1 basis.
From the date your employee(s) close their PUP claim, it will take approximately two weeks before an updated week 1 RPN will be available. If your employees are paid weekly or fortnightly for these pay periods they will pay more tax, due to no tax credits being available on the RPN.
This is unfortunately an unavoidable feature of the transition, but there are some things that you as an employer can do to minimise the extra tax your employees will have to pay:
- Encourage your employees to close their PUP claim on their first day back at work – this will get the process started.
- Pull RPNs for your employees as close to the payment date as possible – this will maximise the chances of receiving an updated RPN for your employee(s), reflecting that they’ve returned to work.
Any overpayments of tax and/or USC will be reimbursed, but employees will need to wait for their Statement of Liability in 2022, meaning that it is better to use the updated information now if possible and save the wait.
NOTE: Overlap between PUP payments and first week back
The PUP system works as follows:
- Friday of any given week: people enrolled for PUP are noted for payment in the following week.
- Tuesday of the following week: PUP payments are made in accordance with the list of people collected on the Friday.
If your employee returns to work on a Monday and immediately closes their PUP claim, as they were still registered as unemployed on Friday they will still receive a PUP payment for their first week back at work. In other words the first week back they will receive both their salary and a PUP payment.
This is not an error so do not be concerned when this occurs. If you would like to learn more about the taxation of PUP for 2021 and the effect of returning to work, you can find out more on the Revenue page.
We hope that you have found the above information useful. If you have any questions on how the information above relates to SimplePay, please feel free to contact us at [email protected].
Equally, if you are not yet a client of SimplePay but would like to be, or if you’d like to know how we can take the effort out of filing and calculating payroll, get in contact with us or visit our website: www.simplepay.ie.
Keep well and stay safe.