Knowledge Base

Payroll 2011

Universal Social Charge USC Application and rates

From the 1st of January 2011 the Income Levy and the Health Levy are combined into a new tax which is called USC. The basis for the operation of this new tax is similar to the way the Income Levy operated. It will be calculated on a Week 1/ Month basis and have a number of bands/cut off points.

The rates are thresholds applicable for 2011 are as follows:

Income Thresholds	Income Levy
Income up to €4004 p.a.	0%
Income up to €10036 p.a.	2%
Income between €10037 and €16016 p.a.	4%
Income in excess of €16016 p.a.	7%

Small Companies

Note 1 Employees who earn €4004 or less per annum are not liable for USC.

Note 2 Employees aged 70 years or above will not be charged the higher 7% rate, regardless of their earnings. You must select the “Age Allowance” option in the Employee Record/Tax & Bank tab/USC box, to implement this exemption feature.

Note 3 Salary Sacrifice, Maternity Pay and Disability Benefits plus a range of other Dept. of Social Protection benefits are not subject to the USC and where applicable in the payroll should be identified as USC Exempt. See Company Edits/ Payments USC Exempt column.

USC Calculation Examples

Example A, employee earns under €4004 per annum

An employee has Gross Earnings of €65.00 per week, therefore no USC will be charged.

However, if the same employee received a taxable bonus of €400 in wk 51 they will be subject to USC at both the 2% and 4% rates as follows;

Gross Pay €465

First €193 is charged at 2% €3.86
Next €115 is charged at 4% €4.60
Balance of €157 is charged at 7% €10.99

Total USC in wk 51 €19.45

Assuming they receive their normal weekly rate of €65 in wk 52 they will be entitled to a full refund of the USC at year end, as their gross earnings are just €3780 which is under the zero rated threshold of €4004.

Example B, employee earns €15600 per annum

Gross earning per week are €300

USC charge is applied as follows;
First €193 USC charged at 2% €3.86
Balance of €107 charged at 4% €4.28
Total USC per week €8.14

Example C, employee earns €1200 per week

Gross Earnings this week €1200 USC is calculated as follows

First €193 is charged at 2% €3.86
Next €115 is charged at 4% €4.60
Balance of €892 is charged at 7% €62.44
Total USC per week €70.90

Please note the following

Employees who have a medical card were previously exempted from the Income Levy. However, under the rules governing the application of the USC, employees with a medical card are charged the full rates of USC, there are no exemptions or reduced rates for them.

USC refunds

When processing the last pay period in the tax year the payroll will calculate the USC due for each employee based on the various percentages and thresholds applicable. Where it ascertains that an overpayment has occurred, it will issue an automatic refund where the user has witched on the option to allow USC refunds in the company details file.