Currently employers and pension providers are to operate the USC on a week-one basis. At a meeting of the Main TALC committee last month, Revenue advised that Regulations will be published shortly which will provide that the USC is to be calcu-lated on a cumulative basis, with effect from 1 January 2012. Revenue also confirmed at the meeting that the EII scheme, which will replace the existing BES, has not been approved by the European Commission; however, approval is expected shortly.

USC Developments

In relation to the USC changes, we have received the following note from Revenue:

• “Revenue advises that the basis of deduction for the Universal Social Charge (USC) will change from week-one to a cumulative basis for the tax year 2012. As a consequence, for 2012, employers’ copies of the Tax Credit Certificate (P2C) will display USC thresholds as Cut-off-points, as well as the applicable rates of USC to be charged. In addition, employees’ Tax Credit Certificates will display USC thresholds in a similar manner to how PAYE Cut-off-points are displayed. The P45 Form will also contain data on USC deductions to enable subsequent employers to operate USC on a cumulative basis where there is a change in employment. The move to a cumulative basis will be underpinned by the publication of Regulations on the Operation of Cumulative USC.
• Preparations are in train to ensure that all stakeholders are made aware of the consequences of the change and Revenue has recently consulted with payroll practitioners and software developers to ensure that employers have the necessary systems available to operate USC on a cumulative basis from next year. Moreover, Revenue will provide an extensive frequently asked questions (FAQ) document on its website detailing how USC will operate on a cumulative basis. It is also intended to issue a notification to all employers informing them of the change and referring them to the FAQ document for more information.”

EII Scheme

The new EII scheme, which will replace the existing Business Expansion Scheme (BES), was first announced in the Budget and is contained in Finance Act 2011. The scheme is subject to European Commission approval, and until then the existing BES relief will continue.

At a recent meeting of the Main TALC committee, Revenue advised that EU approval is expected shortly. Members will be kept updated on any developments in this area.