Illness Benefit is subject to PAYE only, it is not subject to USC or PRSI.
With effect from 1st January 2018, employers are no longer required to tax Illness Benefit through the payroll.
From this date, Revenue will adjust the employee's tax credits and cut off points via the Tax Credit Certificate/P2C file. Revenue will receive real-time interfaces of taxable Illness Benefit from the Department of Employment Affairs and Social Protection (DEASP).
As a result of this change there will be more frequent P2Cs for employees. While employers are no longer responsible for taxing Illness Benefit through the payroll, it is extremely important to implement amended P2Cs immediately.
In addition, from 1st January 2018 Illness Benefit letters will no longer be delivered to the ROS Inbox.
Prior to 1st January 2018, employers were responsible for collecting PAYE due on Illness Benefit issued to employees.
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