The Universal Social Charge, which came into effect on 1 January 2011, is a tax payable on gross income, including notional pay, after any relief for certain trading losses and capital allowances, but before pension contributions.
All individuals are liable to pay the Universal Social Charge if their gross income exceeds the threshold of €4,004 p.a. (€77 per week).
For example:
Yes. While there is no age related exemption individuals aged 70 or over will only pay Universal Social Charge at a maximum rate of 4% irrespective of the level of their income. However, individuals who have income from self-employment that exceeds €100,000 in a tax year are subject to a 3% surcharge. A rate of 7% therefore applies to any income in excess of €100,000.
Yes. Individuals in possession of a full medical card, including a Health Amendment Act card, will only pay Universal Social Charge at a maximum rate of 4% irrespective of the level of their income. However, where an individual has self-employment income in excess of €100,000 for a tax year, the maximum rate is 7% on the amount of the excess. Non-medical card holders are subject to a maximum rate of 10% on such income.
Income from Ireland or income sourced from Ireland will be subjected to the Universal Social Charge.
Directors fees paid by an Irish company to a non-resident director will be subject to the charge.
The standard rates of Universal Social Charge are:
However, these standard rates are modified in certain circumstances. In the case of individuals aged 70 or over, and individuals who hold full medical cards, the 4% rate applies to all income over €10,036.
There is a surcharge of 3% on individuals who have income from self-employment that exceeds €100,000 in a year, regardless of age. Thus, where such individuals are under 70 years and do not hold a full medical card, a rate of 10% applies to such income and where such individuals are aged over 70 years or hold a full medical card, a rate of 7% applies.
A special USC rate of 45% applies to certain bank bonuses paid to employees of those financial institutions that have received financial support from the State. See FAQ 2.25.
1. For payroll purposes the following Universal Social Charge rates apply to persons aged under 70 years:
Applicable to payments made from 1 January 2011
Income Thresholds |
|||
Per Year |
Per Week |
Per Month |
Rate of Universal Social Charge |
Up to €10,036.00 |
Up to €193.00 |
Up to €837.00 |
2% |
From €10,036.01 to €16,016.00 inclusive |
From €193.01 to €308.00 inclusive |
From €837.01 to €1335.00 inclusive |
4% |
In excess of €16,016.00 |
In excess of €308.00 |
In excess of €1335.00 |
7% |
2. For payroll purposes the following Universal Social Charge rates apply to persons aged 70 years and over:
Applicable to payments made from 1 January 2011
Income Thresholds |
|||
Per Year |
Per Week |
Per Month |
Rate of Universal Social Charge |
Up to €10,036.00 |
Up to €193.00 |
Up to €837.00 |
2% |
In excess of €10,036.00 |
In excess of €193.00 |
In excess of €837.00 |
4% |
3. For payroll purposes the following Universal Social Charge rates apply to persons in possession of a full medical card (regardless of age):
Applicable to payments made from 1 January 201 1
Income Thresholds |
|||
Per Year |
Per Week |
Per Month |
Rate of Universal Social Charge |
Up to €10,036.00 |
Up to €193.00 |
Up to €837.00 |
2% |
In excess of €10,036.00 |
In excess of €193.00 |
In excess of €837.00 |
4% |
4. For self-assessed individuals under 70 years the 2011 annual rates are as follows:
Part of aggregate income |
Rate of Universal Social Charge |
The first €10,036 |
2% |
The next €5,980 |
4% |
The next €83,984 |
7% |
The remainder (> €100,000) |
10% |
5. For self-assessed individuals aged 70 years and over or individuals under 70 years who hold a full medical card, the 2011 annual rates are as follows:
Part of aggregate income |
Rate of Universal Social Charge |
The first €10,036 |
2% |
The next €89,964 |
4% |
The remainder (> €100,000) |
7% |
Employer/pension providers are responsible for deducting the Universal Social Charge from their employees’ salaries. Self-employed individuals will make a payment of Universal Social Charge along with their preliminary tax payment by 31 October with any balance payable by 31 October in the following year. For the year 2011, preliminary tax is to be calculated as if Universal Social Charge had been payable for 2010.
The Universal Social Charge is payable on gross income after relief for certain trading losses and capital allowances, but before relief for pension contributions.
Employers/pension providers should note however that if any Dept of Social Protection payments, for example, illness benefit, have been paid to an employee, or salary sacrifices approved by the Revenue Commissioners have been made by the employee, the amount on which the Universal Social Charge is calculated will differ. Therefore, when recording gross pay, these amounts should be deducted and the total pay thereafter, before superannuation contributions, should be used when calculating the Universal Social Charge due.
Statutory redundancy payments are exempt from the charge. Statutory redundancy payments amount to 2 weeks pay per year of service plus a bonus week subject to a maximum payment of €600 per week.
In addition, ex-gratia redundancy payments in excess of the statutory redundancy amount are exempt from income tax, and therefore also the Universal Social Charge, up to certain limits. These limits are up to €10,160 plus €765 per complete year of service in excess of the statutory redundancy. This basic exemption can be further increased by up to €10,000 if the person is not a member of an occupational pension scheme. There is a lifetime tax exempt limit of €200,000 on ex-gratia payments.
Any relevant emoluments paid which are in excess of these limits are subject to the Universal Social Charge. It should be noted that the charge applies after granting the statutory exemptions set out above, and after granting any additional deduction for Standard Capital Superannuation Benefit (SCSB).
How maintenance payments are treated for Universal Social Charge purposes will depend on the nature of the maintenance payments arrangements in place, i.e. are they voluntary payments or legally enforceable payments.
Voluntary maintenance payments (payments paid under an informal arrangement)
Legally enforceable maintenance payments (payable under legal obligation)
Note: In the case of a legally enforceable maintenance arrangement, where a separated couple has jointly elected to be treated as a married couple for income tax purposes, the spouse making the payments does not receive exemption from the Universal Social Charge on the portion of their income which they pay as maintenance. The spouse who receives the payments is not subject to the Universal Social Charge on the maintenance payments they receive.
Share option gains are liable to the Universal Social Charge. Revenue are currently examining how the charge is to apply.
This question was deleted on 11 January 2011. Revenue are currently examining how the charge is to apply.
Universal Social Charge is payable on the abated amount. If, at a future date, the abated amount is revised additional Universal Social Charge will then be payable.
No, section 778 of the Taxes Consolidation Act 1997 provides that an employer’s contribution to an approved retirement benefit scheme or a statutory scheme is not treated as a benefit-in-kind for income tax purposes. As the Universal Social Charge treatment follows the income tax treatment, any employer contribution to such schemes will not be subject to Universal Social Charge. An employer’s contribution to an employee’s PRSA is, however, treated as a benefit-in-kind and chargeable to both income tax and Universal Social Charge.
Irrespective of this, employee contributions are not relieved for Universal Social Charge purposes.
No. Once you satisfy the particular savings institution that you are aged 65 or over and that your total income from all sources, including your deposit account, does not exceed €18,000 in a tax year (€36,000 for a married couple), you do not have to pay USC on the interest income. However, you will have to pay USC in respect of any non-interest income where such income exceeds €4,004 in a year.
If you paid income levy in 2010 on the PRD, this income levy will not be refunded and will be treated as satisfying any liability you may have for USC in 2011 in respect of the amount of PRD refunded. From 1 January 2011, PRD will be charged to USC when the deductions are made. Any PRD refunds will not therefore be chargeable to USC.
No – once your income is greater than the exemption threshold above, you pay the Universal Social Charge on the full amount of your income.
No. You are liable to pay the Universal Social Charge on the full amount of your income on a week1 / month 1 basis. Your income for Universal Social Charge purposes is determined after excluding any Dept of Social Protection or similar type income.
Each spouse is treated individually by their employer/pension provider throughout the year. The amount of Universal Social Charge you pay will depend on your age and the amount of your income. The age of 65 is not relevant for the purposes of Universal Social Charge purposes. A lower maximum rate of 4% applies to individuals (other than those with self-employment income over €100,000) aged over 70. See FAQ 1.7 for the rates and thresholds applicable.
Yes. However, individuals in possession of a full medical card, including a Health Amendment Act card, will only pay Universal Social Charge at a maximum rate of 4% irrespective of the level of their income from employment/pension. This treatment does not apply to individuals who hold other types of ‘medical card’, such as a GP Visit Card, a Drugs Payment Scheme Card or a Long-Term Illness Scheme Card.
Certain individuals who are ordinarily resident in Ireland automatically qualify for an Irish medical card under EU Regulations. However, they still need to submit the appropriate application form to the HSE before a medical card is issued to them. The European Health Insurance Card which provides for access to hospital care similar to that provided in public hospitals is not regarded as a full medical card.
An individual who holds a Northern Ireland medical card will be treated as holding a full medical card for the purposes of qualifying for the 4% rate.
The individual does not need to hold the medical card for the full year to qualify for the 4% maximum USC. It is due as long as the individual holds a full medical card for some period during the year. The individual should supply sufficient evidence to their employer/pension provider that they hold a full medical card to enable the employer/pension provider to apply the 4% maximum rate from the next pay period.
In cases where an employee, in possession of a full medical card, had USC deducted at the rate of 7% from 1 January 2011 they will have overpaid the USC and will be due a refund. Employers should make any such refunds immediately rather than wait until the end of the year. See FAQ 2.22 for information in relation to the refund of other types of overpayment.
Dept of Social Protection payments are not subject to the Universal Social Charge.
An individual who is earning €50,000 p.a. will have a liability to the Universal Social Charge at a rate of 2% on the first €10,036, 4% on the next €5,980 and 7% on the balance of €33,984.
You will pay the Universal Social Charge at the rate of 2% on the first €10,036, 4% on the next €5,980 and 7% on the balance of €53,984.
Your spouse will pay 2% on the first €10,036, 4% on the next €5,980 and 7% on the balance of €103,984.
The Universal Social Charge is calculated on the following weekly thresholds:
Applicable to all payments made on or after 1 January 2011 |
2% on income up to €193.00 |
4% on income from €193.01 to €308.00 inclusive | |
7% on income above €308.00 |
An employee will pay the Universal Social Charge at the appropriate rate(s) on a week 1 basis according to the amount of their payment in that particular week. Where an employee is paid on a monthly basis, the monthly thresholds will apply to the payment.
Yes. Occupational Pensions are subject to the Universal Social Charge. Dept of Social Protection pensions are not subject to the Universal Social Charge.
No. The Universal Social Charge is a separate charge to income tax and there are no deductions or credits due against it. It is collected from gross income at the progressive rates. Excess or unused tax credits cannot be used to reduce an individual’s liability to the Universal Social Charge.
No. Deductions (from gross income) for pension contributions are not allowed.
No. Excess medical expenses which have not been set against income tax liability cannot be used to reduce liability to the Universal Social Charge.
No. The thresholds apply to each spouse individually and cannot be combined where one spouse is below the thresholds and the other above.
No. All payments from the Department of Social Protection, and payments made by other Departments, which are similar to Dept of Social Protection payments are exempt from the Universal Social Charge. Appendix A contains a list of these similar payments.
Any expense payments which are only a recompense for expenses incurred in the performance of duties, are not subject to the Universal Social Charge. Allowances which are in the nature of pay and are part of an individual’s gross income are subject to the charge.
No. Each employer/pension provider is responsible for collecting the Universal Social Charge by reference to the gross income arising in their own employment only. Details of the Universal Social Charge are not carried forward from one employment to another. The Universal Social Charge is collected on a week 1 basis. In circumstances where, in the aggregate of the income arising between the two employments, there is an underpayment of the Universal Social Charge, Revenue will identify this and make arrangements for the collection of the underpayment from the employee concerned. (See also: FAQ 4.27 regarding an employee who has multiple employments ‘opting’ to pay USC)
Appendix B contains a list of income sources that are exempt from income tax. These income sources are also exempt from Universal Social Charge.
An individual whose income consists of exempt (or partly exempt) source income from occupation of certain woodlands, profits from stallion fees, stud greyhound services fees and farmland leasing, along with patent royalty income and earnings of certain writers, artists and composers, will be subject to the charge on any or all of these income sources.
An individual who has no liability to income tax based on their entitlement to tax credits or by use of losses or capital allowances may still have a liability to the Universal Social Charge.
Yes. If a person reaches 70 years at any stage during the year they will benefit from the maximum 4% rate for the whole year.
Your employer/pension provider gave you the Universal Social Charge certificate as your own personal record of the amount of Universal Social Charge deducted while in that employment. You need not do anything with this certificate. Just keep it safely. It should not be sent to Revenue or given to your new employer/pension provider when you commence another employment. Please see 2.22 and 2.24 below regarding overpayments and refunds of the Universal Social Charge.
The Universal Social Charge is calculated on a pay period by pay period basis. Where the Universal Social Charge has been applied for particular pay period(s) throughout the year but you are ultimately liable at either a lower rate or are exempt because you have not exceeded the thresholds at the end of the year, you will have overpaid the Universal Social Charge. In this situation you will be due a refund of some or all of any Universal Social Charge paid.
Where you have been in continuous employment with an employer/pension provider throughout the year in question (i.e., from 1 January to 31 December), your employer/pension provider may refund any overpayment of Universal Social Charge deducted at the end of the year. Where you have not been in continuous employment with an employer/pension provider throughout the year in question, Revenue, rather than the employer/pension provider, will deal with any refund of Universal Social Charge due at the end of the year.
Yes. Universal Social Charge applies to all emoluments of an employment, including anything treated as a taxable benefit-in-kind. An employer contribution to a Personal Retirement Savings Account (PRSA) is chargeable to income tax in the hands of the employee as a benefit-in-kind under section 118 of the Taxes Consolidation Act 1997. As the Universal Social Charge treatment follows the income tax treatment the employer contribution to the PRSA will also be subject to the Universal Social Charge. Universal Social Charge should be deducted on this contribution in a similar manner to any other benefit provided by an employer and accounted for with Universal Social Charge deducted on emoluments.
If you have overpaid the Universal Social Charge you can apply to Revenue for a refund at the end of the year in one of two ways. You can either:
Note
These facilities are not yet in place but will be highlighted when they are available.
Employees of the five financial institutions that have received financial support from the State - Bank of Ireland, AIB, Anglo Irish Bank, EBS and Irish Nationwide Building Society – are chargeable to a special Universal Social Charge rate of 45% where they receive performance-related bonus payments. Normal rates apply where the cumulative amount of any bonus payments does not exceed €20,000 in a single tax year. Where this threshold is exceeded, the full amount is charged at 45% and not just the excess over €20,000. Regular salary that does not vary with the performance of the business or the employee is not subject to the increased charge.
From 1 January 2011 there is a new lower lifetime limit of €200,000 on the amount of retirement lump sums that are exempt from income tax. Amounts in excess of this limit are subject to income tax in two stages. The portion between €200,000 and €575,000 is taxable at a special 20% rate of income tax and any portion above that is taxable at the individuals marginal income tax rate. Universal Social Charge is only payable on the portion above €575,000.
Self-assessed taxpayers have responsibility for operating the charge in respect of all income sources. They will make a payment of Universal Social Charge along with their preliminary tax payment, by 31 October with any balance payable by 31 October in the following year. For the year 2011, preliminary tax is to be calculated as if Universal Social Charge had been payable for 2010.
Gross income is determined after deduction of legitimate expenses directly associated with the performance of the trade. This is in accordance with the normal principles of commercial accounting.
Legitimate revenue expenses directly associated with the performance of the trade can be deducted in calculating the taxable profit figure upon which the Universal Social Charge is chargeable.
Normal business expenses incurred in carrying on a trade are deductible before the Universal Social Charge is calculated. This includes allowances for capital expenditure incurred on providing certain items for the purposes of the trade, such as
Capital allowances (other than those used to create or increase a loss under section 392 TCA 1997) must actually be used in a tax year to be deductible. Only standard rate capital allowances are deductible. Apart from farm buildings, capital allowances that are written off over accelerated 7-year periods are not allowed. Any capital allowances due to people that do not actively carry on a trade are not deductible. Therefore, lessors and other passive investors, such as non-active partners in a partnership trade, will pay the Universal Social Charge on gross income before the deduction of capital allowances. Appendix C contains details of both deductible and non-deductible allowances in respect of the different types of buildings.
Losses other than those arising from the carrying on of a trade or profession are not deductible before Universal Social Charge is charged. Nor can trading losses arising in a tax year reduce other non-trading income in that year. Where unused trading losses are carried forward, only that part of the losses that is actually used to reduce taxable income from the same trade in the tax year to which they have been carried forward is deductible.
Yes. An individual whose income consists of exempt source income from occupation of certain woodlands, profits from stallion fees, stud greyhound services fees and farmland leasing, along with patent royalty income and earnings of certain writers, artists and composers, will be subject to Universal Social Charge on the sources above – subject to the relevant thresholds.
An individual can calculate their preliminary tax for 2011 on the basis of 90% of the 2011 liability, and incorporate Universal Social Charge using the 2011 rates of 2%, 4%, 7% and 10%, as appropriate.
However where the individual wishes to pay preliminary tax on the basis of 100% of the previous year liability then their preliminary payment should be on the basis of the final liability for the year 2010 as if Universal Social Charge at the appropriate rates had been paid for that year, and as if the income levy and health contributions had not been payable for 2010.
In general, individuals in possession of a full medical card, including a Health Amendment Act card, will only pay Universal Social Charge at a maximum rate of 4% irrespective of the level of their income. However, individuals who have income from self-employment that exceeds €100,000 in a tax year are subject to a 3% surcharge. A rate of 7% therefore applies to any income in excess of €100,000. See FAQ 2.4 for further information about what is regarded as a full medical card.
Your Universal Social Charge is calculated as follows:
Gross Income for USC:Self-employment: |
120,000 |
PAYE employment: |
60,000 |
180,000 |
USC liability: |
||
€10,036 |
@ 2% = |
200.72 |
€5,980 |
@ 4% = |
239.20 |
€143,984 |
@ 7% = |
10,078.88 |
* €20,000 |
@ 10% = |
2,000.00 |
12,518.80 |
* There is a surcharge of 3% on individuals who have income from self-employment that exceeds €100,000 in a year. This surcharge applies to the self-employment income only.
Employer/pension providers have responsibility for operating Universal Social Charge in relation to payments they make to their employees. They will deduct and pay the Universal Social Charge to the Collector General on behalf of employees.
Employer/pension providers should pay the Universal Social Charge to the Collector General at the same time and in the same manner as the deductions under the PAYE system.
Penalties similar to those that apply where the employer/pension provider fails to operate PAYE correctly will apply for failure to operate the Universal Social Charge.
Yes. Interest will be payable on late payments of the Universal Social Charge to the Collector General.
The employer/pension provider is only responsible for deducting the Universal Social Charge from income, including notional pay, which he or she is paying to an employee. They are not required to take account of income arising from other sources.
(See also: FAQ 4.27 regarding an employee who has multiple employments ‘opting’ to pay USC)
No. Dept of Social Protection payments are exempt from the Universal Social Charge.
Yes. Direct Debit amounts should be revised to take account of Universal Social Charge payments.
Employer/pension providers should keep the following records in relation to the Universal Social Charge for each employee for each year.
Yes. Details of the Universal Social Charge should be recorded separately on payslips.
Further information will be available shortly in relation to changes in forms issued from the Collector-General to allow for reporting of the Universal Social Charge.
The breakdown of the Universal Social Charge threshold figures is as follows:
Applicable to all payments made on or after 1 January 2011 Persons aged under 70 yearsAnnual Threshold |
Weekly |
Fortnightly |
Monthly |
4-Weekly |
Bi-monthly (every 2 months) |
Twice-monthly |
Quarterly | |
Exemption Threshold4,004See Note below |
77 |
154 |
334 |
308 |
668 |
167 |
1,001 | |
2% |
0.00 up to 10,036.00 |
0.00 up to 193.00 |
0.00 up to 386.00 |
0.00 up to 837.00 |
0.00 up to 772.00 |
0.00 up to 1,673.00 |
0.00 up to 419.00 |
0.00 up to 2,509.00 |
4% |
From 10,036.01 to 16,016.00 |
From 193.01 to 308.00 |
From 386.01 to 616.00 |
From 837.01 to 1,335.00 |
From 772.01 to 1,232.00 |
From 1,673.01 to 2,670.00 |
From 419.01 to 668.00 |
From 2,509.01 to 4,004.00 |
7% |
From 16,016.01 |
From 308.01 |
From 616.01 |
From 1,335.01 |
From 1,232.01 |
From 2,670.01 |
From 668.01 |
From 4,004.01 |
Annual Threshold |
Weekly |
Fortnightly |
Monthly |
4-Weekly |
Bi-monthly (every 2 months) |
Twice-monthly |
Quarterly | |
Exemption Threshold 4,004See Note below |
77 |
154 |
334 |
308 |
668 |
167 |
1,001 | |
2% |
0.00 up to 10,036.00 |
0.00 up to 193.00 |
0.00 up to 386.00 |
0.00 up to 837.00 |
0.00 up to 772.00 |
0.00 up to 1,673.00 |
0.00 up to 419.00 |
0.00 up to 2,509.00 |
4% |
From 10,036.01 |
From 193.01 |
From 386.01 |
From 837.01 |
From 772.01 |
From 1,673.01 |
From 419.01 |
From 2,509.01 |
Note:
Employers/pension providers are to apply the €4,004 exemption threshold in payroll – similar to the operation of the Income Levy. The USC is operated on a week 1 basis. Where the weekly earnings are €77 or below, no USC is deducted. Where the weekly earnings are above €77, USC is deducted on the full payment. See above table for monthly, fortnightly, etc, equivalents.
Example 1
Weekly pay €75
As the payment is less than the weekly exemption threshold of €77, no USC is deducted from this payment.
Example 2
Weekly pay €400
As the payment exceeds the weekly exemption figure of €77, USC is applied to the full payment as follows:
€193 |
@ 2% = |
3.86 |
€115 |
@ 4% = |
4.60 |
€ 92 |
@ 7% = |
6.44 |
Total |
14.90 |
Example 3
Individual aged over 70 - Weekly pay €400
As the payments exceed the weekly exemption figure of €77, USC is applied to the full payment as follows:
€193 |
@ 2% = |
3.86 |
€207 |
@ 4% = |
8.28 |
Total |
12.14 |
Individuals aged 70 years and over pay USC at a maximum rate of 4%.
Example 4
Individual with full medical card - Weekly pay €400
As the payments exceed the weekly exemption figure of €77, USC is applied to the full payment as follows:
€193 |
@ 2% = |
3.86 |
€207 |
@ 4% = |
8.28 |
Total |
12.14 |
An individual with full medical card (regardless of age) pays USC at a maximum rate of 4%.
No. The same standard threshold amounts, listed at 4.13 above, apply in all instances. For example, a weekly paid employee should, if a payment of salary is made in the week in which employment commences or ceases, have the full Universal Social Charge threshold applied for the week, even if the payment relates to part of the week only.
Where an employee is in continuous employment/pension (from 1 January to 31 December) with an employer/pension provider throughout the year in question the employer/pension provider should make adjustments to Universal Social Charge liabilities in the circumstances listed hereunder.
Continuous employment
‘Continuous employment throughout the year’ means that the employee has been in employment/pension with the employer/pension provider for the full period, 1 January 2011 to 31 December 2011. It is not necessary for the employee to have ‘52 paid insurable weeks of employment’ in the year to be included in the end of year employer/pension provider calculation. An individual who has been in continuous employment with an employer/pension provider from 1 January 2011 to 31 December 2011 and who was absent from work on various forms of unpaid leave (e.g. sick leave, maternity leave, adoptive leave, etc) throughout the year is eligible to be included.
For example, a weekly paid employee, in continuous employment throughout 2011, is absent on unpaid leave for a period of 3 weeks in February 2011. As a result they had only 49 pay days in the January to December period. In the end of year Universal Social Charge calculation the employer/pension provider should use 52 pay days in the January-December calculation for this employee.
Where the employee has not been in continuous employment (1 Jan – 31 Dec) with an employer/pension provider throughout the year in question (e.g. employee commenced current employment on 15 January 2011) Revenue, rather than the employer/pension provider, will deal with any refund of Universal Social Charge due.
(Note: Adjustment should be made in respect of overpayment of the Universal Social Charge only. Where an employer/pension provider finds that the Universal Social Charge has been under deducted at the end of the year they are not to deduct more Universal Social Charge. Revenue will deal with any underpayments arising.)
Exemption threshold €4,004 not exceeded
Where the Universal Social Charge has been applied for particular pay period(s) throughout the year but the exemption threshold of €4,004 p.a. has not been exceeded at the end of the year then no liability to the Universal Social Charge arises. In this situation the employer/ pension provider should make an adjustment at the end of the year and refund all Universal Social Charge deducted. Where the employee has not been in continuous employment with an employer/pension provider throughout the year in question Revenue, rather than the employer/pension provider, will deal with any refund of Universal Social Charge due.
Individuals liable at a lower rate(s)
Where a rate of Universal Social Charge has been applied for particular pay period(s) but the employee ultimately is liable at a lower rate(s) at the end of the year they will have overpaid the Universal Social Charge. In this situation the employer/pension provider should make an adjustment at the end of the year and refund any overpayment of Universal Social Charge deducted. Where the employee has not been in continuous employment with an employer/pension provider throughout the year in question Revenue, rather than the employer/pension provider, will deal with any refund of Universal Social Charge due.
Individuals aged 70 or over
Where an employee/pensioner is aged 70 Universal Social Charge is applied at a maximum rate of 4% after the first threshold of €10,036 has been applied. Where that individual reached the age of 70 at any time during the year the 4% ceiling applies for the full year.
Where the employer/pension provider knows at the start of the year that the individual will reach 70 at some stage in the year the 4% max can be applied from the first pay period.
Where the employer/pension provider only becomes aware mid-year that the individual has reached 70 or will reach 70 in the year, they should apply the 4% max rate from the next pay period. Any refund due to the individual as a result of paying USC at the 7% rate can be paid at the end of the year, provided the individual has been in continuous employment with the employer/pension provider throughout the year. Where the employee/pensioner has not been in continuous employment with an employer/pension provider throughout the year in question Revenue, rather than the employer/pension provider, will deal with any refund of Universal Social Charge due.
Individuals in possession of a full medical card
Individuals in possession of a full medical card will only pay Universal Social Charge at a maximum rate of 4% irrespective of the level of their income. See FAQ 4.30 for further information about medical cards.
In cases where an employee, in possession of a full medical card, had USC deducted at the rate of 7% from 1 January 2011 they will have overpaid the USC and will be due a refund. Employers should make the refund immediately rather than wait until the end of the year. See FAQ 4.30.
If the effect of paying holiday pay in advance is that the employee receives the equivalent of two or three weeks' pay in the same week and no pay in the following week, or following two weeks, the Universal Social Charge will work in the same way as the tax credits and standard rate cut-off point currently work for those weeks. The 'increased' pay the employee receives in the week immediately preceding the week / 2 weeks holidays is not extra pay earned in that particular week but rather the pay for the following week/2 weeks brought forward and paid in that particular week. In this situation the employee is due the Universal Social Charge thresholds applied to each of the following weeks' pay as normal. It should be noted that this does not apply where the employee is being paid holiday pay immediately before leaving the employment.
In this case the employee will be due the Universal Social Charge four-weekly threshold amount applied to their four-weekly salary as normal and have two weekly threshold amounts applied to their two weeks holiday pay. In their next four-weekly salary period they will receive payment for two weeks (as the other two have already been paid in advance) and have two weekly threshold amounts applied to this payment.
In this case the employee will be due the Universal Social Charge weekly threshold amount applied to their weekly salary as normal and have four separate weekly threshold amounts applied to their four separate weeks holiday pay. It is not correct to apply the four-weekly or monthly Universal Social Charge threshold amounts to the total of their four weeks holiday pay.
Yes. Any payments made on or after 1 January 2011 but which relate to 2010 (or earlier years) will be subject to the Universal Social Charge. It depends on the date of the payment rather than on when the income was earned. For example, where an individual does overtime in December 2010 and receives the payment for this overtime in January 2011, this payment is subject to the Universal Social Charge.
No. Any deduction for the Universal Social Charge does not reduce the gross pay for PAYE/PRSI purposes, as illustrated in the following example:
An employee earns €800 per week.
Their weekly deduction for Salary Sacrifice for the Travel Pass Scheme is €20
Their weekly deduction for employee superannuation is €40
Universal Social Charge calculation:
Gross pay |
€800 |
Less Salary Sacrifice for Travel Pass |
€ 20 |
Universal Social Charge is applied to |
€780 |
193×2%=€3.86, 115×4%=€4.60, and 472×7% = |
€33.04 |
Total Universal Social Charge= |
€41.50 |
Note: the Universal Social Charge is applied before the employee superannuation is deducted.
PRSI calculation:
Gross pay |
€800 |
Less Salary Sacrifice for Travel Pass |
€ 20 |
PRSI is applied to |
€780 at the appropriate rate(s) |
PAYE calculation:
Gross pay |
€800 |
Less Salary Sacrifice for Travel Pass |
€ 20 |
Less employee superannuation |
€ 40 |
PAYE is applied to |
€740 at the appropriate rate(s) |
Where an employee/pensioner is aged 70 Universal Social Charge is applied at a maximum rate of 4% after the first threshold of €10,036 has been applied. Where that individual reached the age of 70 at any time during the year the 4% ceiling applies for the full year. If the individual has already paid Universal Social Charge at the higher rate of 7%, they will be due a refund. This refund can be dealt with by the employer at the end of the year or the individul can apply to Revenue at the end of the year.
Note
Where the employer/pension provider knows at the start of the year that the individual will reach 70 at some stage in the year the 4% max can be applied from the first pay period.
When an employee ceases employment the employer should issue a Universal Social Charge Certificate to the employee together with form P45. It is not necessary to send a copy of this certificate to Revenue. It is for the employee’s own records. The information detailed on this certificate will be for ‘this employment only’. Where an individual had more than one period of employment with the same employer in the year the certificate will state the Universal Social Charge information in respect of the latest period of employment only. The individual will be given an Universal Social Charge certificate each time they cease employment. This will mean, for example, that where an individual commenced and ceased employment three times with the same employer in 2011 they will receive three Universal Social Charge certificates from this employer in 2011. Employers should note that details of the Universal Social Charge should not be included on forms P45.
The Universal Social Charge certificate should be issued even when employees have nil Universal Social Charge deducted during their employment.
Where a payment is made to an ex-employee that is not included on the form P45 an Universal Social Charge certificate should be issued to reflect this payment. This supplementary Universal Social Charge certificate can either show the details of the supplementary payment only and be marked ‘Supplementary’ or it can include the details from the P45 plus the supplementary payment and be marked ‘Amended’.
Some payroll software systems will print a version of the certificate automatically from the payroll record.
Alternatively employers can use the Revenue template found at www.revenue.ie/en/tax/usc/forms/universal-social-charge-certificate-2011.pdf
Simply fill in the details on screen and print it out. A paper version of this Universal Social Charge certificate (see sample certificate in Appendix C) is available from:
Revenue’s Forms & Leaflets Service
Telephone (24-Hour service) 1890 30 67 06
If calling from outside the Republic of Ireland please phone + 353 1 70 23 050
Email: custform@revenue.ie
The following information is required on the certificate:
Note regarding end of year forms:
An end of year Universal Social Charge certificate will not be in place. Instead, the form P60 will be revised to cater for the Universal Social Charge. See 4.12 regarding revision to forms.
In circumstances where an individual is in receipt of Schedule E income which is subject to an Exclusion Order, and that individual is resident in a State which has a Double Taxation Agreement with Ireland, Universal Social Charge should not be deducted from the Schedule E payment.
Where an individual is in receipt of Schedule E income which is subject to an Exclusion Order, and that individual is resident in a State which does not have a Double Taxation Agreement with Ireland, then that income is subject to the Universal Social Charge in the same way as the income of all other employees.
The Universal Social Charge applies to income rather than to categories of individuals. Income received in the form of Social Welfare payments is exempt income. The Employer PRSI Exemption Scheme allows employees who are in receipt of a ‘back to work’ allowance to retain part of that allowance for 3 years after they take up employment. This 'back to work' allowance is exempt from Universal Social Charge and is not added to other income to see if the €4,004 threshold is reached. However, the employment income (and any other non-Social Welfare income) is chargeable to the Universal Social Charge where it exceeds €4,004.
No. Maternity Benefit is not subject to the Universal Social Charge. Employees who are absent due to maternity leave but who are in continuous employment are not liable for the Universal Social Charge on their maternity benefit payment paid as part of their wages. The balance of any emoluments paid by an employer continues to be subject to the Universal Social Charge.
Deduction of Universal Social Charge is on a “week-one” basis and therefore the Universal Social Charge should be deducted and remitted on the same basis as was applied in previous weeks.
Yes. To avoid a situation where the employee has an under deduction of the USC at the end of the year it is preferable if the employer could, in these exceptional circumstances, accommodate this situation and deduct the USC at a rate higher than the gross pay would suggest when requested to do so by the employee.
Yes. Both employee contributions and employer contributions to a Permanent Health Insurance scheme are chargeable in full to the USC.
Yes. Universal Social Charge applies to an employer’s contribution to a Permanent Health Insurance Scheme. Such a contribution is treated as a taxable benefit-in-kind.
Individuals in possession of a full medical card will only pay Universal Social Charge at a maximum rate of 4% irrespective of the level of their income. This treatment does not apply to individuals who hold other types of ‘medical card’, such as a GP Visit Card, a Drugs Payment Scheme Card or a Long-Term Illness Scheme Card.
Certain individuals who are ordinarily resident in Ireland automatically qualify for an Irish medical card under EU Regulations. However, they still need to submit the appropriate application form to the HSE before a medical card is issued to them. The European Health Insurance Card which provides for access to hospital care similar to that provided in public hospitals is not regarded as a full medical card.
An individual who holds a Northern Ireland medical card will be treated as holding a full medical card for the purposes of qualifying for the 4% rate.
The individual does not need to hold the medical card for the full year to qualify for the 4% maximum USC. It is due as long as the individual holds a full medical card for some period during the year. The individual should supply sufficient evidence to their employer/pension provider that they hold a full medical card.
Where the employer/pension provider knows at the start of the year that the individual holds a full medical card the 4% maximum USC can be applied from the first pay period. Where the employer/pension provider only becomes aware mid-year that the individual holds a full medical card, they should apply the 4% maximum USC rate from the next pay period.
In cases where an employee, in possession of a full medical card, had USC deducted at the rate of 7% from 1 January 2011 they will have overpaid the USC and will be due a refund. Employers should make the refund immediately rather than wait until the end of the year. See example refund calculations hereunder.
Example 1
A weekly-paid employee, under 70 and in continuous employment from 1 January 2011, has the following USC rates applied from 1 January 2011:
2% |
Up to €193.00 |
4% |
From €193.01 to €308.00 |
7% |
From €308.01 |
Employer Payroll
Payday |
Date |
Gross Income for USC |
USC Deducted this week |
1 |
7 January 2011 |
1,000 |
56.90 |
2 |
14 January 2011 |
1,000 |
56.90 |
3 |
21 January 2011 |
1,200 |
70.90 |
4 |
28 January 2011 |
1,100 |
63.90 |
The employee receives a full medical card on 2 February 2011 and notifies his employer. As a holder of a full medical card the following weekly rates apply for the full year 2011:
2% |
Up to €193.00 |
4% |
From €193.01 |
On the next payday the employer applies these rates.
Payday |
Date |
Gross Income for USC |
USC Deducted this week |
5 |
4 February 2011 |
1,000 |
36.14 |
As this employee has had USC deducted at the rate of 7% on some of his earnings prior to receiving the full medical card he will have overpaid the USC and will be due a refund. His employer will calculate the refund as follows:
Weeks 1-4 |
Gross Income for USC €4,300 |
USC liability |
|
772 (193×4) @ 2% = |
15.44 |
3,528 @ 4% = |
141.12 |
156.56 | |
USC already deducted: |
248.60 |
Refund due: |
92.04 |
Example 2
An individual ceased employment with Employer A on 11 February 2011 and earned €4,650 to date of leaving. She commenced employment with Employer B on 14 February 2011, earning €800 per week.
As the employee is under 70 years of age the following USC rates apply:
2% |
Up to €193.00 |
4% |
From €193.01 to €308.00 |
7% |
From €308.01 |
Employer B Payroll
Payday |
Date |
Gross Income for USC |
USC Deducted this week |
7 |
18 February 2011 |
800 |
42.90 |
8 |
25 February 2011 |
800 |
42.90 |
9 |
4 March 2011 |
800 |
42.90 |
The employee receives a full medical card on 6 March 2011 and notifies her employer. As a holder of a full medical card the following weekly rates apply for the full year 2011:
2% |
Up to €193.00 |
4% |
From €193.01 |
On the next payday Employer B applies these rates.
Payday |
Date |
Gross Income for USC |
USC Deducted this week |
10 |
11 March 2011 |
800 |
28.14 |
As this employee has had USC deducted at the rate of 7% on some of her earnings with Employer B prior to receiving the full medical card she will have overpaid the USC and will be due a refund. Employer B will calculate the refund as follows:
Note
Employer B calculates the USC refund due from Employment B earnings only. The USC deducted in Employment A is NOT factored into Employer B’s refund calculation. This employee may be due a further refund in respect of the 7% USC paid while employed with Employer A. Revenue will look after this further refund at the end of the year.
Weeks 7-9 |
Gross Income for USC in Employment B: €2,400 |
|
USC liability |
||
579 (193×3) @ 2% = |
11.58 |
|
1,821 @ 4% = |
72.84 |
|
84.42 |
||
USC already deducted: |
128.70 |
(in weeks 7 to 9 in Employment B only) |
Refund due: |
44.28 |
Example 3
An individual had the following employments in 2011:
As the employee is under 70 years of age the following USC rates apply:
2% |
Up to €193.00 |
4% |
From €193.01 to €308.00 |
7% |
From €308.01 |
Employer A Payroll (recommencement) - July 2011
Payday |
Date |
Gross Income for USC |
USC Deducted this week |
28 |
15 July 2011 |
1,000 |
56.90 |
29 |
22 July 2011 |
1,000 |
56.90 |
The employee receives a full medical card on 24 July 2011 and notifies his employer. As a holder of a full medical card the following weekly rates apply for the full year 2011:
2% |
Up to €193.00 |
4% |
From €193.01 |
On the next payday Employer A applies these rates.
Payday |
Date |
Gross Income for USC |
USC Deducted this week |
30 |
29 July 2011 |
1,000 |
36.14 |
As this employee has had USC deducted at the rate of 7% on some of his earnings with Employer A (recommenced employment) prior to receiving the full medical card he will have overpaid the USC and will be due a refund. Employer A will calculate the refund as follows.
Note
Employer A calculates the USC refund due from Employment A’s latest period of employment only. The USC deducted in Employment A during the period 1 January to 31 March 2011 and in Employment B from 1 April 2011 to 25 June 2011 is NOT factored into Employer A’s refund calculation. This employee may be due a further refund in respect of the 7% USC paid in previous periods of employment in 2011. Revenue will look after this further refund at the end of the year.
Weeks 28-29 |
Gross Income for USC in Employment A’s latest period of employment: €2,000 |
|
USC liability |
||
386 (193×2) @ 2% = |
7.72 |
|
1,614 @ 4% = |
64.56 |
|
72.28 |
||
USC already deducted: |
113.80 |
(in weeks 28 to 29 in Employment A’s latest period of employment only) |
Refund due: |
41.52 |
Any payments made on or after 1 January 2011 are subject to the Universal Social Charge. The pay frequency which applied at the employee’s date of leaving should be applied to the USC deduction. Where the employee was paid on a weekly basis, the USC should be applied using the weekly thresholds. Where the employee was paid on a monthly basis, the USC should be applied using the monthly thresholds.
Example 1
A weekly-paid employee ceased employment in January 2011. In March 2011 his employer pays him arrears of pay of €75.
As the employee was weekly-paid at his date of leaving, the USC is applied to the arrears payment using the weekly USC thresholds. As the arrears of pay €75 is below the weekly exemption threshold of €77 no USC is charged.
Example 2
A weekly-paid employee ceased employment in November 2010. In February 2011 her employer pays her arrears of pay of €500. The USC is applied to the arrears payment as follows:
€193 |
@ 2% = |
3.86 |
€307 |
@ 4% = |
12.28 |
16.14 |
Example 3
A monthly-paid employee ceased employment in January 2011. During his employment he held a full medical card. In May 2011 his employer pays him arrears of pay of €2,000.
The USC is applied to the arrears payment as follows:
€ 837 |
@ 2% = |
16.74 |
|
€1,163 |
@ 4% = |
46.52 |
(4% maximum USC as a full medical card holder) |
63.26 |
Payments made by the Dept of Enterprise, Trade and Innovation
Payments made by the Health Service Executive (HSE)
Payments made by the Dept of Education
Payments made by the Dept of Agriculture
Payments made by the Dept of Social Protection
Section |
Title |
42 |
Interest on savings certificates |
118 |
Exemption from BIK – Travel Pass, new bicycle scheme |
153 |
Distributions to certain non-residents |
189 |
Payments in respect of personal injuries |
189A |
Special trust for permanently incapacitated |
190 |
Haemophilia Trust |
191 |
Hepatitis C |
192 |
Thalidomide |
192A |
Exemption in respect of certain payment under employment law |
192B |
Foster Care Payment |
193 |
Income from Scholarships |
194 |
Child benefit |
194A |
Early Childcare Supplement |
195A |
Exemption in respect of certain expense payments |
196 |
Expenses of members of Judiciary |
196A |
State Employees: Foreign Service Allowance |
196B |
Employee of certain agencies: foreign service allowances |
197 |
Bonus or interest paid under instalment savings schemes |
198 |
Certain interest not to be chargeable |
199 |
Interest on certain securities |
200 |
Certain foreign pensions |
201 |
Basic and increased exemptions in respect of tax under section 123 (Redundancy) including SCSB |
202 |
Relief for agreed pay restructuring |
203 |
Lump sum weekly payment or resettlement allowance paid under the Redundancy Payments Act, 1967 |
204 |
Military & other pensions, gratuities and allowances |
205 |
Veterans of war of independence |
216A |
Rent a Room relief |
216B |
Scéim na bhFoghlaimeoirí Gaeilge |
216C |
Childcare service relief |
Type of building |
Write-off period |
Annual rate % |
Notes |
Factory, mill |
25 |
4 |
|
Dock undertaking |
25 |
4 |
|
Market gardening |
10 |
10 |
|
Intensive production of ivestock |
10 |
10 |
Outside of farming trade |
Hotel |
25 |
4 |
Previously 7 year write-off (up to 1 August 2008) |
Tourist accommodation |
25 |
4 |
holiday hostels, holiday camps, caravan parks, guest houses |
Airport |
10 |
10 |
|
Farm building |
7 |
15 |
|
Farm pollution control |
3 |
33⅓ |
EU Nitrates Directive Does not apply where expenditure incurred after 31 December 2010 |
Type of building |
Write-off period |
Annual rate % |
Notes |
Hotel |
7 |
15 |
Now 25-year write-off (since 1 August 2008) |
Holiday cottage |
10 |
10 |
|
Private hospitals |
7 |
15 |
|
Mental health centre |
7 |
15 |
|
Nursing home |
7 |
15 |
|
Nursing home residential unit |
7 |
15 |
|
Convalescent home |
7 |
15 |
|
Sports Injury Clinic |
7 |
15 |
|
Childcare facility |
7 |
15 |
|
Mid Shannon Tourism Infrastructure Scheme |
7 |
15 |
