Since 1 July maternity Benefit, payable by the Department of Social Protection (DSP), is liable to tax. As part of the on-going exchange of information arrangements between DSP and Revenue, Revenue will receive details of the benefit payments which will be updated onto Revenue's records. Revenue published an information leaflet on the tax treatment of maternity benefit as well as information on the treatment of illness benefit and jobseekers benefit for PAYE taxpayers.

The Minister for Finance announced as part of Budget 2013 that from 1 July maternity pay would be subject to tax. This was subsequently legislated for in section 8 Finance Act 2013. What this means is that as from 1 July, payments of maternity benefit, adoptive benefit and health & safety benefit, are taxable. The benefits are not liable to USC or PRSI. Payments for periods prior to 1 July 2013 remain exempt from tax, USC and PRSI.

Revenue's information leaflet outlines how Revenue will tax maternity benefit for PAYE taxpayers in receipt of Maternity Benefit payable by the DSP from 1 July 2013. For most cases, individuals who pay their tax through the PAYE system will automatically have their annual tax credits and rate bands reduced by the amount of the payments. Employers will be advised of the adjusted tax credits and rate bands on employer tax credit certificates.

The information leaflet also contains a section dealing with ‘Frequently Asked Questions’ in relation to the taxation treatment for PAYE taxpayers. Examples illustrating the tax treatment are also included.