Pay Related Social Insurance (PRSI) for the self-employed was introduced in 1988. All self-employed people aged between 16 years and 66 with earnings more than a specified amount (currently €5,000 per annum) must pay PRSI. The class of PRSI contribution paid by self-employed people is Class S.
When you commence self-employment, you must first register for the self-assessment system with Revenue as a self-employed person. Under self-assessment, at the end of each tax year you will submit your annual end of year returns to Revenue who will assess your liability for income tax, PRSI and Health Levy based on the information supplied by you and any amounts owing are paid directly to Revenue.
The vast majority of self-employed people are dealt with under the self-assessment system. However there are certain categories of self-employed people who pay PRSI under PAYE or the PRSI is collected directly by the Department of Social and Family Affairs. See Paragraph 7 below for details.
If you are in doubt as to whether you are employed or self-employed you should contact your local Revenue Office or Scope Section [LINK] of the Department of Social and Family Affairs for assistance. In cases of any continuing doubt your Revenue Office or Scope Deciding Officer will look at the facts of your case and advise you on your status. See Code of Practice for determining the Employment or Self-Employment status of individuals for further information.
1. Who pays Class S PRSI?
PRSI Class S is paid by self-employed people such as:
- farmers, professional people (for example, doctors, dentists, solicitors etc.),
- people in business on their own or in partnerships, religious, contractors, sub-contractors carrying on independent businesses,
- people with income from investments, rents or maintenance payments
- employees who are also self-employed in a trade or profession pay Class S PRSI as well as their PRSI contribution as an employee
- company directors, motorcycle couriers etc. who pay their tax through the PAYE system but who are not regarded as employees for social insurance purposes
- Artists and childminders who Revenue have made exempt from income tax under special schemes run by Revenue
2. What benefits may I get by paying Class S PRSI?
PRSI Class S provides cover for:
3. Who does not pay Class S PRSI?
The following people do not pay PRSI at Class S:
- 'prescribed relatives' (father, mother, grandfather, grandmother, stepfather, stepmother, son, daughter, grandson, granddaughter, stepson, stepdaughter, brother, sister, half-brother, half-sister of the self-employed contributor) who help a self-employed person with their business but who are not partners in the business*,
* If you employ a 'prescribed relative' you must contact Scope Section, Department of Social and Family Affairs, Telephone (01) 6732585 or email email@example.com for a decision on the relative’s social insurance contribution,
- people getting Pre-Retirement Allowance on an ongoing basis,
- people whose total income from self-employment and employment (if applicable) is below a certain amount (currently €5,000 a year),
- people insured as employees whose only income under self-employment is unearned income such as share dividend payments or rent,
- occupational pensioners, whose only income is unearned,
- non residents with unearned income.
4. Do I pay PRSI on all income?
You pay PRSI only on your reckonable income, which includes:
- income from a trade or profession,
- interest, annuities and income from foreign investments, such as property,
- rent from any property in Ireland,
- income from which tax has already been deducted such as, annuities, bank or building society interest, maintenance payments,
- income from share dividends and other payments received from companies based in Ireland, and
- certain taxable income from employment (for example, company directors, motorcycle couriers), minus any allowable superannuation contributions.
You may have to pay PRSI on both earned and unearned income.
5. What is excluded from reckonable income?
The following types of income are not considered when working out your PRSI contribution:
• capital allowances,
• approved superannuation contributions for self-employed people who pay their income tax under the PAYE system,
• any social welfare payments or benefits,
• Infectious Diseases Maintenance Allowance or Mobility Allowance paid by the Health Service Executive,
• occupational pensions,
• any payments to:
- officers belonging to the Dáil or Seanad
- members of the European Parliament
- State officers such as, Labour Court members, the Comptroller and Auditor General, the Harbour Commissioners, etc.,
• any income continuance payments received by a person forced to leave employment due to illness, as long as the Revenue have approved the scheme,
• redundancy payments, 'golden hand shake' payments and early retirement bonuses.
6. What amount of PRSI do I pay?
Your contribution is 4% of your reckonable income or €500, whichever is greater. Under the self assessment system, PRSI is paid direct to your local tax office together with any other amount due. See section on PRSI rates [LINK] for full details.
7. Categories of self-employed people not covered by self-assessment.
If you are a self employed company director, PRSI is deducted by your employer under the PAYE system. Although the PRSI of a company director is deducted by his/her employer it is the responsibility of each company director to ensure that the correct amount of PRSI has been deducted and remitted to Revenue.
No Net Liability (NNL) Cases
If you have been told by an Inspector of Taxes that you need not make a Tax Return, but your self-employment income is €5,000 or more per year, you are liable to pay a flat rate social insurance contribution to the Department of Social and Family Affairs.
Artists, Childminders and other tax exempt incomes
If you have been granted an Artists Income Tax Exemption by the Inspector of Taxes and your self-employment income is €5,000 or more per year you may have a liability to pay Class S PRSI Contributions. Likewise, if you have received tax exempt status for childminding, forestry premiums or stallion fees, you may also have a liability to pay Class S PRSI.
If you fall into any of the above categories you should contact Self-Employment Section, Department of Social and Family Affairs at the address given in Section 12 below.
8. Special scheme for sharefishermen
If you are a Share fisherman or woman who is classified as self-employed, you may choose to pay an additional contribution for certain benefits under Class P. You will pay a contribution of 4% of income (up to the earnings ceiling for PRSI) in addition to the PRSI being paid already under Class S. There is a PRSI free allowance of €2,500.
These additional contributions paid under Class P provide cover for:
- limited Jobseeker’s Benefit (for up to 13 weeks in each calendar year)
- limited Illness Benefit (for up to 52 weeks)
- Treatment Benefit including dental, optical and aural benefits for themselves and their dependent spouses.
9. What happens if I am no longer self-employed?
If you are no longer liable to pay Class S PRSI (for example, if you stop being self-employed or if your income falls below the €5,000 limit) and you are under age 66, you may apply to become a voluntary contributor.
Voluntary contributions give cover for the pensions that you were covered for when you were last working and paying compulsory PRSI.
For more details about the Voluntary Contribution Scheme see voluntary contributions or information booklet SW8 or contact:
Voluntary Contributions Section
Social Welfare Services Office
Tel: 1890 690 690
10. Can I get a PRSI refund?
If you reached age 56 on or before 6th April 1988, and you paid PRSI for the first time on or after that date and you do not qualify for a State Contributory or Non Contributory Pension, you may get a refund of the pension element (53%) of the contribution paid. Applications for this refund should be sent to Self-Employment Section (see address at Paragraph 12 below.)
11. How do I register as a self-employed person?
If you become self-employed you must register with the Revenue Commissioners for PRSI purposes. It is not necessary to register with the Department of Social and Family Affairs. However, if your only source of self-employed income is from a company directorship, you do not need to register as self-employed with the Revenue Commissioners because your tax and PRSI will be collected under the PAYE system.
12. Where can I get more information?
For more information on PRSI for the self-employed, contact your local Social Welfare Office or Self Employment Section below.
Social Welfare Services Office
Tel: Waterford (051) 356000 Dublin (01) 704 3000
See also information booklet PRSI for the Self Employed - SW74