As part of the ongoing exchange of information arrangements between the Department of Social Protection (DSP) and Revenue, Revenue has received information from the DSP of long-term pension payment details covering the State Pension, the Transition Pension (paid to people aged between 65 and 66), Widow’s / Widower’s / Surviving Civil Partner’s and Invalidity pensions.

If someone receiving a DSP pension has no other sources of income, they will not be liable for Income Tax on the DSP pension.

However if, in addition to the DSP pension, an individual also has an additional source of income – say an occupational pension from a former employer – they may be liable to tax on the DSP pension.

A person who is 65 years of age or over in 2012 may have a DSP pension and other income sources but may still not pay any tax if their total income for the year is likely to be less than €18,000, if single, or €36,000, if married or in a civil partnership.

The means by which a PAYE taxpayer pays Income Tax on their DSP pension is that Revenue reduces the taxpayer’s annual PAYE tax credits and rate band entitlements and this results in additional tax being stopped by their pension provider on their non-DSP occupational pension.

Please contact our offices, if further clarification is required, or to review Tax Credit Certificates issued in relation to the above.

Willie John, John J. Sheahan’s & Co Accountants

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