Up to 10,500 carers could face tax bills under new Revenue system

Ministers insist no retrospective tax review will take place after thousands of carers received warning letters from Revenue

Government says no backdated tax review for carers despite letters warning of possible liabilities.

Nearly 10,500 carers could owe the State up to €1,000 in tax, minister for social protection Dara Calleary has said.

However, both the minister and Revenue said there will be no review of tax paid by carers in previous years following a new tax collection process introduced earlier this month.

On Tuesday, two newspapers reported that more than 34,000 letters had been issued to carers warning they could owe tax on their Carer’s Allowance.

Both Carer’s Allowance and Carer’s Benefit have always been liable for income tax. However, the method of paying this tax changed earlier this month.

Until the end of 2025, a person in receipt of the allowances had to contact Revenue to confirm what, if any, tax liability they had.

Since January 1, the department of social protection has provided Revenue with details of those receiving Carer’s Allowance and Carer’s Benefit, allowing tax to be collected in real time, rather than at the end of the tax year.

Speaking at a press conference on Tuesday afternoon, Mr Calleary confirmed that letters were sent to 36,000 carers, with 1,900 contacting a dedicated helpline.

“Revenue have engaged with people already [and] they’re going to be very empathetic in relation to this,” he said.

“We want to be very clear that we don't want people to be concerned. We want to work with them.

“My understanding is that less than 10% of the 104,000 people who receive Carer’s Allowance and Carer’s Benefit will have a tax liability. The majority of that will be less than €1,000.” 

A spokesperson for the minister later clarified that about 90% of carers are either not liable for income tax or are already declaring their carer’s income to Revenue.

Mr Calleary said information had been shared with Revenue about Carer’s Allowance, Carer’s Benefit and “quite a number of schemes that are taxable”.

A spokesperson for Revenue told the Irish Examiner that “no new tax has been introduced” and that it is “not carrying out a review of prior years in respect of Carer’s Allowance or Carer’s Benefit as a result of this change”.

They also stated that where income tax has been underpaid, Revenue will “collect any liability over an extended four-year period from 2027 onwards, through adjustments to tax credits”.

Speaking on RTÉ’s News at One, minister for public expenditure Jack Chambers insisted this was a “forward-looking change”.

“The Department of Social Protection have said that 90% of those in receipt of Carers Allowance were already tax compliant or have no tax liability. Some of them wouldn't have another income [and] they wouldn't be subject to tax anyway.” 

In the Dáil, Taoiseach Micheál Martin said that “nothing had changed” and urged politicians not to create “unjustified fears”.