PAYE, PRSI, USC, PRD, ASC
PAYE, PRSI, USC, ASC 2019 (Replacing PRD)
What is PAYE?
PAYE stands for Pay As You Earn. PAYE is the name given to the income tax collected through Payroll on behalf of the Revenue Commissioners (Irish Tax Authorities).
What are the Current Rates of Taxation?
The current rates of taxation are allocated by Revenue.
How is my Tax collected and paid?
It is the responsibility of UCD as your employer to collect PAYE from your taxable income and remit it to the Revenue Commissioners. The level of PAYE deducted from your income will be dependent on the instructions contained on your most recent RPN (Revenue Payroll Notification) of Tax Credits & SRCOP.
What is the Normal Tax Basis and Week 1/Month 1 Tax Basis?
The normal basis of PAYE taxation operates on a Cumulative Basis from the beginning of each tax year. As taxable earnings accumulate from the beginning of the year, so does the PAYE customers entitlement to Tax Credits and SRCOP. In effect, each time an individual receives a payment through the PAYE system, their tax liability is re-calculated from the beginning of the year. Total PAYE falling due to that point in the tax year is compared against PAYE already paid, the difference being the amount of PAYE payable in the current period. This method of calculation allows for rebalancing of PAYE through the payroll system during the course of a tax-year. The vast majority of RPN's are issued on the Cumulative Basis of Taxation.
The Week 1/Month 1 (also called the Temporary Tax) Basis, applies one week or months worth of Tax Credits and SRCOP (depending on the pay interval applicable), to the value of taxable income received in the pay-period in question. No consideration is taken of accumulated earnings or previous PAYE paid in the calculation of tax liability due. Hence this method does not allow for rebalancing of PAYE throughout the course of the tax year.
There are a number of reasons why you may be subject to a Week 1/Month 1 Basis:
• If you have recently changed employers, your new employer will operate the Week 1/Month 1 Basis until such time as Revenue have registered you to your new employer, confirmed details of prior earnings and PAYE paid within the tax year, and have issued a Cumulative RPN (Revenue Payroll Notification)
• Certain Social Welfare Benefits are subject to the operation of PAYE. If you have been in receipt of benefits, Revenue will apply the Week 1/Month 1 Basis until such time as they are confident all taxable income has been assessed and accounted for.
• Gaps in registered employment history can also lead to a Week 1/Month 1 Basis being applied, as Revenue will want to ensure details of all taxable income has been made known to them before a Cumulative Certificate is issued.
These are the most common reasons for the application of a Week 1/Month 1 Basis. By contacting Revenue directly you can often accelerate the process of obtaining a Cumulative RPN.
When does the Tax Year Start?
The Irish tax year is based on a Calendar year and so commences on the 1st January and ends on 31st December each year.
What documents should I receive from the Revenue Commissioners?
All PAYE customers should receive a notification of their Tax Credits & Standard Rate Cut-off Point from the Revenue Commissioners for each tax year. You should be able to view your tax certificate through your PAYE anytime account. If you change employers during the course of a tax year, you should also receive a revised certificate made out to your new employer.
What are Tax Credits?
Under the PAYE system of tax collection, all PAYE customers are entitled to tax credits, which vary in relation to personal circumstances. Each individual will be entitled to a Personal Tax Credit as well as a PAYE Tax Credit. Your employer will use your credits to reduce your PAYE liability due in accordance with the instruction issued by Revenue.
What is a Standard Rate Cut-Off Point?
Standard Rate Cut-Off Point describes the point to which your earnings will be assessed at the lower rate of tax (currently 20%). All taxable income above the SRCOP will fall due for assessment to PAYE at the higher rate of tax (currently 40%). Your Tax Certificate will outline your SRCOP and the manner in how this figure was arrived at. Any queries in relation to your SRCOP should be directed to Revenue.
What is Benefit-in-Kind?
With effect from 1st January 2004, is it the obligation of employers to operate PAYE and PRSI on taxable benefits provided by the employer to their employees. The value of the BIK is considered to be Notional Pay for the purposes of calculating PAYE and PRSI. The benefit received will be assessed in accordance with your most recent RPN & SRCOP.
I have a second job- what should I do about my tax?
Each PAYE customer is entitled to one amount of Tax Credits and SRCOP, which are issued on the basis of their own personal circumstances.
If you are employed by two or more employers, you can arrange to have your Tax Credits & SRCOP split between your employments in a manner that will make best use of your entitlements. You should contact Revenue, outlining your expected earnings from each employment. You should also be in a position to quote the Employers Registered Number of each place of employment. Revenue will split your entitlements between your places of employment, notify your employers of same, and issue a RPN of Tax Credits & SRCOP to your home address. Your PAYE will be assessed in accordance with notifictions issued.
What is a P60?
A P60 is a statement of taxable earnings and income tax paid in a tax year. Your P60 will also show details of your PRSI contributions and class in a tax year. It also details your USC paid and any Local Property Tax deducted in any one year. P60s are valuable documents and should be kept in a secure manner. All employees who are in the service of an employer as at 31st December each year is entitled to a P60.
Please note from 2019 onwards Your P60 is now replaced by End of Year Statement issued by the Revenue .
Why is my level of Tax fluctuating?
The Irish PAYE (Pay As You Earn) system operates on a cumulative basis from the beginning of each tax year .
If you receive the exact same taxable pay in each pay period, and your entitlements to Tax Credits and SRCOP remain unchanged, then you would expect to pay a consistent amount of PAYE in each pay-period. If you receive varying levels of taxable income, the PAYE liability arising on your payments will be calculated inline with your accumulated entitlements based on your tax certificate and your accumulated level of income received since the beginning of the tax year. If you receive varying levels of payment and/or, are paid on an intermittent basis, it is not uncommon to see varying levels of PAYE being deducted. The normal basis of PAYE taxation allows for this and will balance out your PAYE upon receipt of each payment. In cases where a Week 1/Month 1 (Temporary) basis of taxation is applied, no provision is made for adjustments in PAYE during the course of the tax year.
I think I have overpaid my tax - what should I do?
Current Tax Year:
Your PAYE is calculated in accordance with the most recent Cert of Tax Credits & SRCOP issued by the Revenue Commissioners. You should check that the details on your copy of the Tax Certificate are correct and in line with your own personal circumstances. Should any of the details need amending, you must contact Revenue directly as any alteration can only be made by a Revenue Official. Once an amended certificate has been issued and received by Payroll, it will be applied in the next payroll run.
PRSI information (Pay Related Social Insurance)
It falls within the remit of the Payroll Office to deduct and remit PRSI (Pay Related Social Insurance) in respect of employees of UCD. The Dept. of Social Protection is responsible for all aspects of Social Welfare administration in Ireland.
• What is PRSI?
• PPSN (Personal Public Service Number)
• Classes of Contribution
• PRSI Ceiling
• Low/Fluctuating Earnings
• What is Subsidiary Employment?
• DSFA Offices
What is PRSI?
PRSI (Pay Related Social Insurance) usually in the form of an employee and employer contribution, is calculated on a percentage basis of reckonable earnings (gross pay less pre-tax deductions plus notional pay).
Classes of Contribution
PRSI is collected under different Classes, each of which is further divided into sub-classes, which are determined by the level of reckonable earnings payable in a payperiod.
The Class of PRSI applied to an individual record is determined by the date of joining UCD and whether the income payable from UCD is a salary/wages payment or a payment resulting from the Occupational Pension Fund.
Possible classes applied are A, D, J, and M.
In the context of UCD PRSI is applied as follows:
Class A - Employees who have reckonable earnings of €38 or more per week (or monthly equivalent) and who were recruited to UCD on or after 6th April 1995
Class D - Permanent and pensionable employees recruited before 6th April 1995.
Class J - Where reckonable earnings are less than €38 per week (or monthly equivalent), employees aged 66 year or over and people to whom UCD is a subsidiary employment.
Class M - Those in receipt of occupational Pensions.
For details of Rates of Contribution and more detailed information on Classes of PRSI please see Social Welfare Leaflet SW14.
What is Subsidiary Employment?
Employment which is regarded as being of a subsidiary nature is insurable under Class J. Subsidiary employment status is applied to individuals who's employment in UCD is not their main source of employment and they are insurable under Class B,C,D or H in their principle employment.
Please note that the term subsidiary employment does NOT simply refer to a part-time or occasional employment. The above satisfying conditions must be met.
Public Sector Pension Related Deduction (applies to 31 Dec 2018 when it is replaced by the ASC)
For all Public Sector organisations, employees pay is subject to a Pension Related Deduction and applies to employees who:
• Are members of a Public Service Pension Scheme
• Those entitled to a benefit under a Public Service Pension Scheme
• Have an entitlement to join a Public Service Pension Scheme
• Those who receive any type of payment or allowance in lieu of membership of a Public Service Pension Scheme
The Levy is calculated as follows:
Weekly Threshold Monthly threshold Levy (%)
€552.88 €2395.83 0%
€600.96 €2604.17 10.00%
Balance Balance 10.50%
This means (%)
First €2395.83 at 0%
Next €2604.17 at 10.00%
Over €5000 at 10.50%
Note: Pension related deduction is cumulative with effect from 01/01/2011.
It is payable on all income, pensionable and otherwise (Overtime, allowances or any other like payment). It is additional to any other pension contribution that you are already paying. It excludes Revenue-approved salary sacrifice: i.e. Travel pass salary deduction. The Deduction does not apply to a pension or pension lump sum. Under the Income Tax Acts, deductions will be treated in the same way as a normal pension contribution. It will not affect the calculation of an individual’s limit under Revenue rules for pension contributions (including AVC’s).
Budget 2011 - Public Sector Pension Related Deduction Summary - with effect from 01/01/11 no employee PRSI relief will be allowed on Pension related deduction charges.
Additional Superannuation Charge(ASC)
The Pension Related Deduction (PRD), which was introduced in the Financial Emergency Measures in the Public Interest Act 2009, will be replaced from 1 Jan 2019 with the Additional Superannuation Contribution (ASC).
Unlike PRD, ASC will only apply to gross pensionable remuneration. This means that it will not apply to non- pensionable allowances and overtime, hourly paid remuneration and benefits-in kind.
ASC is charged at different rates and with different threshold bands depending on the pension scheme membership of the employee.
ASC is treated as an expense for the purpose of Income Tax and is separate to contributions payable under the rules of UCD pension schemes. It will be shown separately on the payslips of employees.
The ASC thresholds and rates for all employees liable to pay the ASC with effect from 1 January 2020 are detailed below:
Member of Standard Accrual pension scheme: (Employees engaged pre 1st Jan 2013.)
|Standard Accrual Group||Standard Accrual Group|
|Pre Single Pension Scheme||Pre Single Pension Scheme|
|Up to €32000||Exempt||Up to €34500||Exempt|
|€32000 to €60000||10%||€34500 to €60000||10%|
|€60000 plus||10.50%||€60000 plus||10.50%|
Member of Single Pension Scheme: (Employees engaged from 1st Jan 2013 onwards)
|Single Pension Scheme Group||Single Pension Scheme Group|
|Up to €32000||Exempt||Up to €34500||Exempt|
|€32000 to €60000||6.66%||€34500 to €60000||3.33%|
|€60000 plus||7.00%||€60000 plus||3.50%|