Dáil Éireann Debate, Tuesday - 21 April 2026
430. Deputy John Connolly asked the Tánaiste and Minister for Finance whether a single person who is in receipt of a State pension (contributory) or State pension (non-contributory) and half rate carer's allowance only, are required to make an income tax return and pay any tax due by way of lump sum or whether in such cases it can be deducted at source; and if he will make a statement on the matter. [28241/26]
Amharc ar fhreagraIt is a general principle of taxation that all income, from whatever source, is income for tax purposes, unless specifically exempted by legislation, including amounts paid to an individual by the Department of Social Protection (DSP).
Section 19 of the Taxes Consolidation Act 1997 (TCA 1997) provides that income from offices or employments, and from annuities, pensions, or stipends payable out of State funds, is within the charge to tax under Schedule E. Section 112 TCA 1997 charges income tax on all Schedule E income received in a year, with the exception of proprietary directors who pay tax in the year the income arises. Therefore, all payments from the DSP are considered taxable under Schedule E unless specifically exempted from income tax.
A charge to tax under schedule E is imposed in respect of certain Social Welfare payments by virtue of section 126 TCA 1997. Section 126 (2) TCA 1997 provides that payments made under the old age (contributory and non-contributory) pensions (now known as the State Pension) are deemed to be emoluments to which Chapter 4 of Part 42 applies. Section 126 (6A) TCA 1997 provides for the exemption of certain payments from DSP from income tax which are listed in the table within Section 126 of the TCA 1997, Carer’s Allowance is not an exempt payment. Therefore, the State Pension and Carer’s Allowance are subject to tax under Schedule E.
However, it should be noted that Social Welfare payments are not subject to Universal Social Charge or Pay Related Social Insurance.
The Deputy’s question concerns an individual whose only sources of income are payments from DSP, being the State Pension and Carer’s Allowance. I am advised by Revenue that it remains the case that tax on these payments is not deducted at source by DSP before the payment is made to the individual.
Where an individual is in receipt of a State pension (contributory) or State pension (non-contributory) and half rate carer's allowance the person’s tax liability will depend on their individual personal circumstances, income levels and personal credits available to them, and the final taxation position for individuals can only be quantified if they submit an annual PAYE income tax return, claiming any additional credits or reliefs, such as health expenses, or declare any additional income they may have. Any tax that may be due will not be paid unless the individual files a PAYE Income Tax return.
It is important to note, that many individuals who are only in receipt of DSP payments may not have a tax liability, due to their income level being below the taxation threshold, or they have sufficient tax credits to reduce their income tax liability to zero.
However, should an underpayment of tax arise on foot of the submission of a PAYE Income Tax Return, Revenue will seek to minimise any potential hardship in such cases, by collecting the liability through a reduction of a taxpayer’s tax credits over an extended 4-year period.
Where an underpayment of tax arises and the individual has no PAYE income and they wish to clear a liability, they may do so by contacting Revenue’s Collector General’s Division Card Payment Line, on (01) 738 36 65, Monday to Friday from 09:30 – 13:30 hrs., where a card payment will be accepted by phone. Alternatively, they can opt to get a bank draft, cheque payment or a postal order from An Post to repay the liability at amounts of their own choosing, and send to the following address:Collector General's Division,
Sarsfield House,
Francis Street,
Limerick,
V94 R972
The full range of tax credits, reliefs and exemptions that are available, depending on individual circumstances, are published on Revenue’s website at: https://www. www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/marital-and-civil-status/exemption-and-marginal-relief/exemption-limits.aspx.
Further information on the taxation of payments from the Department of Social Protection is available at www. www.revenue.ie/en/jobs-and-pensions/taxation-of-social-welfare-payments/index.aspx.
