- The
pay threshold to determine whether people employed under a contract of service pay
PRSI at Class A or J remains at
€38.
- Employees paid €38 to €287 inclusive in any week should be recorded under Subclass A0.
- Employees paid €287.01 to €356 inclusive in any week should be recorded under Subclass AX.
- In any week that the employee is paid more then €356 it should be recorded under Subclass A1 or A2 *.
- Participants in Community Employment earning €287 or less in any week should be recorded under Subclass A8. In any week that the pay is more than €287 record under Subclass A9.
- Community Employment supervisors and employees on apprenticeship schemes are insurable at Class A in the normal way.
- The annual pay ceiling for
PRSI had been increased to €42,160 for employees.
- The Class J contribution normally relates to people with reckonable earnings of less than €38 per week (from all employments). However, a small number of employees are insurable at Class J
no matter how much they are paid, such as employees aged 66 or over and people in subsidiary employment (defined below).
- Class B, C, D or H employees paid up to €287 inclusive in any week record under subclass B0, C0, D0 or H0.
- Class B, C, D or H employees paid between €287.01 and €356 inclusive, record under subclass BX, CX, DX or HX.
- For people covered under Class J, S or K paid up to €356 inclusive in any week record under subclass 0 i.e. J0, S0 or Class M (for people within Class K) as appropriate.
- Employees or Self-employed (excluding those listed in note below) with pay or income of more than €356 in any week should be recorded under subclass 1 (i.e. B1, C1, D1, H1, J1, S1 or K1).
- Employees or Self-employed with pay or income more than €356 in any week, who do not have to pay the Health Contribution (*see note below) should be recorded under subclass B2, C2, D2, H2, J2, S2, or Class M (for people within Class K).
- The Class S minimum annual contribution for year 2004 remains at €253.
- The annual pay ceiling for
PRSI has been increased to €42,160 for employees.
* NOTE: |
Medical Card Holders, people aged 70 and over and recipients of a Social Welfare Widow's or Widower's Pension, One-Parent Family Payment or Deserted Wife's Benefit or Allowance do not have to pay the Health Contribution, even if their pay is more than €356 per week. |
COMPONENTS OF THE
PRSI CONTRIBUTION
|
The Pay Related Social Insurance (PRSI) contribution is made up of a number of different components including:
- Social Insurance at the appropriate percentage rate for employees and employers which varies according to the pay of the employee and benefits for which he or she is insured.
- 2.00% Health Contribution, paid by the employee where applicable, goes to the Department of Health and Children towards funding the Health Services.
- 0.70% National Training Fund Levy, included in the employer's contribution in Classes A and H.
LEVELS OF PAYMENT FOR 2004 |
PRSI contributions will be payable as follows:
- They will be paid at the appropriate percentage rates for employees with reckonable earnings up to €42,160.
- On reckonable pay of more than €42,160, the employer's share (Social Insurance and the 0.70% National Training Fund Levy in Classes A and H) is due and the 2.00% (Health Contribution) by the employee where applicable.
- Class S, social insurance at 3.00% and the 2.00% Health Contribution (where applicable) on all reckonable income.
The Health Contribution and Training Fund Levy are included in the contribution rates outlined above.
PRSI is calculated on the employee's reckonable pay. The gross money pay plus notional pay if applicable, reduced by Superannuation and Permanent Health Insurance contributions made by an employee, deducted under a net pay arrangement by the employer, which are allowable for income tax purposes.
The employee's portion of the Social Insurance Contribution is paid on the employee's reckonable pay to a ceiling of €42,160 in 2004. The employer's portion is payable on all reckonable pay of each employee.
PRSI -FREE ALLOWANCE FOR EMPLOYEES
|
The
PRSI -free allowance remains at €127 per week (per individual employment) for employees with weekly reckonable pay of more than €287 in Classes A and H, and at €26 for all employees in Classes B, C and D. The allowance does not apply to the Health Contribution or the employer's share of
PRSI. In other words, in Class A it applies to the calculation of the 4% employee Social Insurance deduction, but not to the 2% Health Contribution. The allowance is noncumulative, so, it only applies for weeks of insurable employment in which
PRSI is payable (see "holiday pay" below).
Remember that this allowance does not alter the gross reckonable weekly pay threshold that determines the appropriate contribution subclass.
It is important to note that the method of calculating
PRSI outlined above caters for the inclusion of the €127/€26
PRSI-free allowance.
For employees paid other than weekly, alternatives to the weekly
PRSI -free allowance are:
Weekly | €127 | €26 |
Monthly | €551 | €113 |
Fortnightly | €254 | €52 |
MEDICAL CARD HOLDERS, WIDOWERS, WIDOWS, LONE PARENTS |
It is the employer's responsibility to establish if employees are medical card holders, are aged 70 or over, receive a Social Welfare Widow's/Widower's Pension, One-Parent Family Payment, Deserted Wife's Benefit/Allowance or a Widow's/Widower's Pension acquired under the social security legislation of a country covered by
E.C. Regulations, and if so, the employees do not have to pay the 2% Health Contribution, regardless of what they earn.
People, in any of the categories listed above, whose pay or income is more than €356 per week fall into Subclass A2, B2, C2, D2, H2, J2, S2 or M (for people within Class K) as appropriate.
Employees with weekly reckonable pay of €287 or less fall into Subclass A0, B0, C0, D0 or H0. Those paid between €287.01 and €356 fall into Subclass AX, BX, CX, DX or HX.
For people in classes other than A, B, C, D and H, in any week that reckonable pay is €356 or less, Subclass J0, S0 or Class M (for people within Class K) will apply.
Everyone aged 70 or over qualifies for a medical card and do not pay the 2.00% Health Contribution, regardless of whether or not they have a medical card.
In general
PRSI deductions are decided by the nature of the employment and the amount of the employee's reckonable pay
in any week . Therefore, the employee's
PRSI Class can vary from week to week if pay changes. The following pay thresholds determine the appropriate subclass within Class A
except where otherwise indicated. For rates tables, see above.
UP TO €37.99 (FROM ALL EMPLOYMENTS) - J0 |
Insurable for occupational injuries benefits only, regardless of hours worked.
Note: Class J also applies to all employees aged 66 and over and employees in subsidiary employment (see below)
regardless of what they are paid.
€38 TO €287 (INDIVIDUAL EMPLOYMENTS) - A0 |
Employees in Classes A, B, C, D and H with pay of €287 or less do not have to pay
PRSI. They should be recorded under Subclass A0, B0, C0, D0, H0 or A8. The employer's
PRSI remains payable as normal.
Alternatives to the €38 to €287 weekly thresholds:
Monthly | €165* to €1,244 |
Fortnightly | €76* to €574 |
* This threshold only applies to Subclass A0 employees whose total pay in each week is at least €38.
NOTE: In all other classes when reckonable weekly pay or income is €356 or less, record under Subclass J0, S0 or Class M (for people within Class K).
€287.01 TO €356 (INDIVIDUAL EMPLOYMENTS) - AX |
Employers in Class A pay the lower 8.5%
PRSI rate up until the employee's weekly pay reaches €356. In any week that the employee's pay falls within this band that is €287.01 to €356, record under Subclass AX. This pay band also applies to Subclasses BX, CX, DX, HX and A9 (with the employer rate payable). See
NOTE above for other classes.
Alternatives to the €287.01 to €356 weekly thresholds:
Monthly | €1,244.01 to €1,543 |
Fortnightly | €574.01 to €712 |
MORE THAN €356 (INDIVIDUAL EMPLOYMENTS)- A1/A2 |
Employees do not have to pay the 2% Health Contribution if their weekly pay is less than €356. Therefore,
people in all classes who earn €356.01 or more in any week should be recorded under Subclass A1, B1, C1, D1, H1, J1, S1 or K1 as appropriate or Subclass A2, B2, C2, D2, H2, J2, S2 or Class M respectively for widows or widowers for example.
Alternatives to the €356.01 weekly thresholds:
Monthly | €1,543.01 |
Fortnightly | €712.01 |
Note possible refund: Where an employee's weekly pay fluctuate above and below €356, but the annual pay during 2004 is not more than €18,512, the employee may claim a refund of the 2% Health Contribution deduction from the Collector-General, Customer Services, (PRSI Refunds), Sarsfield House, Francis St., Limerick.
A contribution week is each successive period of seven days starting on the 1 January each year. Thus, week 1 is the period from 1 to 7 January inclusive, week 2 from 8 to 14 January and so on.
For 2004, the contribution week starts on a Thursday and ends on a Wednesday.
A contribution at the appropriate class should be awarded to an employee for each contribution week or part of one, for which he or she gets paid.
If you pay an employee for a period greater than a week, apply the relevant
PRSI -free allowance for each of the weeks involved. It is also important to determine the subclass correctly.
EXAMPLE: An employee receives two weeks holiday pay with a current weeks wages. Three contributions are awarded, the earnings should be averaged over 3 weeks to determine the correct
PRSI subclass, and three weeks
PRSI-free allowance (€127 x 3) should be applied. This arrangement also applies when an employer pays holiday pay when an employees leave the employment.
Payment of Disability Benefit and Injury Benefit can now be made directly to your company where sick pay arrangements require the employee(s) to hand over Disability Benefit/Injury Benefit payments to their employers. The new Disability Benefit Claim Form/First Medical Certificate (MC 1) now has a section where the employee can indicate that any payment(s) due can issue directly to the employer.
Employers should note that the relevant medical certificates for Disability/Injury Benefit claimants are available from any of the General Practitioners who are on the panel of the Irish Medical Organisation (IMO) and that medical evidence of incapacity must be submitted within 7 days (21 days for Injury Benefit) of a person becoming unfit for work even if the employee is being paid while out of work.
Otherwise, the employee may lose money if the claim is late even though the person is qualified to receive the benefit.
Lump sum payments made to employees when they leave employment are not regarded as reckonable pay for
PRSI. These include redundancy, gratuities, ex-gratia and pay in lieu of notice. However, a Class K contribution is paid on the taxable amount. If the lump sum is exempt from tax, it is exempt from
PRSI.
People who were insured at Class A, B, C, D, H or S who no longer have to pay, or leave compulsory
PRSI may opt to pay Voluntary Contributions to provide cover for Pensions.
Applications must be made within 12 months from the end of the
PRSI Contribution year in which a
PRSI contribution was last paid or credited. For further information contact:
Voluntary Contribution Section -
Tel. (051) 356 000 or (01) 704 3000 Extn. 6006/7
PRSI FOR THE SELF-EMPLOYED
|
People whose income is subject to
PAYE income tax but who are held not to be insurable as employees, continue to be insurable at Class S. However, where their reckonable income
from all sources is less than €3,174 for year 2004, they will not be held to be insurable (see paragraph on Voluntary Contributions). In such cases, Class S should be applied during the year and contributors can apply for a refund of the
PRSI paid during that year after the end of the tax year. They can contact:
Refunds Section - Tel: (01) 804 4400 ext 4401/4407.
The minimum contribution under Class S is €253 for the year 2004. Where a self-employed person's total
PRSI deductions for the year are less than €253, the outstanding balance must be paid to the Department of Social and Family Affairs:
Directors Unit, Self Employment Section (051) 356027.
Employers, who are personally liable for
PRSI under Class S, are required to register with the Department of Social and Family Affairs. A registration form
SE 3 is available for this purpose from:
Self-Employment Section -
Tel. (051) 356 000 or (01) 704 3000 Extn. 6003 to 6005
NATIONAL TRAINING FUND LEVY |
The National Training Fund Levy of 0.70% is included in the employer's share of
PRSI under Class A and H,
with no change in the overall rate payable by the employers.
From 6 April 2000, a refund of
PRSI on enforceable maintenance payments made by a separated person to his/her spouse is available. The
PRSI due will be re-calculated on the reckonable pay/income reduced by the amount of maintenance payment. Any excess
PRSI paid will be returned by claiming a refund after year end, 31 December 2004 from the Collector-General, Customer Services, (PRSI Refunds), Sarsfield House, Francis St., Limerick.
COMMUNITY EMPLOYMENT SCHEMES |
Participants on Community Employment are insurable at Suclass A8 or A9. See above for rates.
NOTE: Community Employment Supervisors and employees on Apprenticeship Schemes are insurable at Class A in the normal way.
Subsidiary employment, which is insurable at Class J irrespective of earnings, is defined in legislation. It includes for example, employment of people who are also insurable at Class B, C, D or H in their main employment.
REHABILITATIVE EMPLOYMENT |
- Sheltered Workshop employment is not insurable under Social Welfare Acts as it is:
- not regarded as being employment under a contract of service (in other words, no employer or employee relationship involved).
- the allowance being paid is not "reckonable income" or "reckonable emoluments" for
PRSI (and
PAYE) purposes.
- Employment in the open labour market where a normal employer/employee relationship exists is insurable at a Class A rate if weekly income is €38 or more and at a Class J rate if less than €38.
PERSONAL PUBLIC SERVICE NUMBER |
(
PPS No. - formerly
RSI Number)
It is vital that the correct
PPS No. is shown on your P35 end of year return for each employee.
Without the correct
PPS No. it may be impossible to update your employee's record or process a claim for social welfare benefit. This in turn could lead to further enquiries to you.
If you need assistance in tracing the
PPS No.(s) for your employee(s), please have them contact:
Client Data Services - Tel. (01) 704 3281
RECORDING OF CONTRIBUTIONS |
(End of Year Returns for 2004)
For the year 2004 and subsequent years, the gross pay on the form P35 (end of year return) for each employee should include any taxable benefit (notional pay) received by that employee during the year. In addition, the total amount of taxable benefits in the year for all employees should be included in the appropriate section of the summary page of the P35.
The P35 should not include any class or subclass of
PRSI that did not apply during the tax year.
If the employee changes class (for example Class A0 and J0) an aggregate total of weeks for all classes should be included on the P35.
If more than two classes or subclasses are involved during the year, you should fill in a form PRC 1 (copy in your P35 Pack) or a computer printout in the same format showing the classes and number of weeks of insurable employment in each class or subclass.
You must use Form P35 LT when the
PPS No. is unknown, but you still record the Employee's Name, Address, Date of Birth and Mother's Birth Surname.
Where an employee leaves his or her job you should complete a form P45 and give it to the employee
immediately . The P45 is very important and may be required as evidence of entitlement to Social Welfare benefits.
TAXATION OF UNEMPLOYMENT OR DISABILITY BENEFIT |
Payments for child dependents are excluded from the taxation of Unemployment Benefit and Disability Benefit. In addition, the first six weeks of Disability Benefit is exempt from tax.
The Department will notify you of the amount of Disability Benefit to be taken into account for tax purposes where appropriate. Taxation of Unemployment Benefit will still be mainly applied by the tax office.
If you have any enquiries about taxation of benefits contact the local tax office or the Central Telephone Information Office, at LoCall 1890 236 336.
A Ready Reckoner containing weekly calculations for Classes A, J, K and S and further information regarding
PRSI Rates for Employers and Employees is available from:
Information Services
Department of Social and Family Affairs,
Oisín House
Pearse Street, Dublin 2.
Telephone (01) 673 2352
A range of information is now available for employers on the Department's website at
www.welfare.ie.
This Leaflet is intended as a guide only and does not purport to be a legal interpretation.