Revenue issued a notice for employers advising that from 1 January 2012 all employees’ taxable illness benefit should be included with earnings. However, where employers have decreased tax credits and tax cut-off points rather than including the benefit as part of taxable pay, this approach can be continued for 2012 only. Revenue has now issued eBrief No. 37/12 which covers the treatment of taxable Illness Benefit paid to PAYE employees by the Department of Social Protection (DSP).

In the eBrief, Revenue advises that the 2012 P60, P35L and P35L/T will be revised to show taxable pay inclusive of taxable Illness Benefit and a new dedicated field for taxable Illness Benefit. The Employers Guide to PAYE has been updated to reflect this point. Revenue has also recently published IT22 “Taxation of Illness and Short-term Occupational Injury Benefits”.

Further information and links to the eBrief, the PAYE notice, the Employers Guide to PAYE and IT22 are available from the Revenue website. This matter is also covered in more detail in the feature article by Patricia Quigley on here.