Employees who reach the PRSI ceiling prior to 1 May 2009
Most employees will not have reached the previous PRSI ceiling of €52,000 by 1 May 2009 and will therefore, continue to pay PRSI up to the revised ceiling of €75,036.
Where an employee reached the PRSI ceiling of €52,000 prior to 1 May 2009, earnings from 1 May 2009 to 31 December 2009 will be subject to a ceiling of €23,036 i.e the employee concerned, having ceased payment of PRSI prior to May 1, will recommence payment of PRSI on earnings from May 1 and will, over the course of the year, pay up to the €75,036 ceiling.
(Where an employee commences employment and presents a P45 dated after May 1, the employer should assume that total income, as recorded on the P45, has been subject to the correct rate of PRSI.)
Possible refund of Health Contribution
Where an employee's weekly pay fluctuates above and below €500, but the annual pay during 2009 is not more than €26,000, the employee may claim a refund of the 2% or 4% Health Contribution deduction.
Where an employee's weekly pay fluctuates above and below €1,925, from 1 January 2009 to 30 April 2009 and/or above and below €1,443, from 1 May 2009 to 31 December2009, the employee may claim a refund of the 0.5% or 1% Health Contribution deduction if the amount paid in 2009 is in excess of that due.
The employee may claim a refund of the Health Contribution deduction after year end, 31 December 2009, from:
Department of Social and Family Affairs
PRSI Refunds,
Oisín House,
Pearse St.,
Dublin 2.
Telephone: (01) 673 2586
Holiday pay
If you pay an employee for a period of more 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 week's wages. To determine the correct PRSI subclass for each week, apply the PRSI-Free Allowance (€127 X 3) and record the contributions accordingly. This arrangement also applies when an employer pays holiday pay when an employee leaves the employment.
Sick pay
Payment of Illness Benefit and Injury Benefit can now be made directly to your company where sick pay arrangements require the employee(s) to hand over Illness Benefit or Injury Benefit payments to their employers. The Illness 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.
Completion of P45
Where an employee leaves his or her employment, a form P45 should be completed and given to the employee immediately. The P45 is very important and may be required as evidence of entitlement to social welfare payments.
Lump sum payments
Lump sum payments made to employees when they leave employment are not regarded as reckonable pay for PRSI purposes. 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.
PRSI for the self-employed
Self-employed people, other than self-employed company directors, must register with the Revenue Commissioners for PRSI purposes. Under the self assessment system, PRSI is paid to the local tax office together with any other payment due. Self-employed company directors pay their PRSI under the PAYE system.
The rate of PRSI contribution payable for those whose annual income is below €26,000 is 3% of reckonable income, or €253 which ever is greater.
For more information, log on to 'www.welfare.ie'.
If a person is no longer liable to pay PRSI, they may apply to become a voluntary contributor.
For more information, log on to 'www.welfare.ie'.
For further information, contact Self-Employed Section, telephone: (051) 356 000
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.
Taxation of Jobseekers or Illness Benefit
Payments for qualified child(ren) are excluded from the taxation of Jobseeker's Benefit and Illness Benefit. The first six weeks of Illness Benefit are exempt from tax in each year. This Department will notify you of the amount of Illness Benefit to be taken into account for tax purposes, where appropriate. Taxation of Jobseeker's Benefit will still be mainly applied through the tax office. If you have any enquiries about taxation of social welfare benefits, contact your local tax office.
Maintenance payments
A separated person may claim a refund of PRSI on enforceable maintenance payments made to his or her spouse. 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 2009, from the PRSI Refunds Section, Oisín House, Pearse St., Dublin 2, telephone: (01) 673 2586.
Subsidiary employments
Subsidiary employment, which is insurable at Class J regardless 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 is involved). The allowance being paid is not “reckonable income” or 'reckonable emoluments' for PRSI (and PAYE) purposes.
However, 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 it is less than €38 (from all employments).
Personal Public Service Number (PPS No.)
It is vital that the correct PPS No. is shown on your P35 end of year return for each employee. If you need assistance in tracing the PPS No.(s) for your employee(s), please have them contact Client Identity Services, telephone: (01) 704 3281
Recording of contributions (End of year returns for 2009)
For the year 2009 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.
If you need help
Further information on PRSI Rates is available including a range of information for employers on our website at 'www.welfare.ie'.
You can also download PRSI information booklets from our website.