UNIVERSAL SOCIAL CHARGE

by

The Universal Social Charge (USC)  was introduced in the budget on 7th December 2010. It replaces the income levy and the health levy which have now been abolished.It is a tax payable on gross (non exempt) income  from 1st January 2011. Any (non exempt)  income earned before this date but not paid until after 1st January 2011 is also liable to the USC. If  a persons (non exempt)  income is under €4,004 for the full year, they can apply for a refund from the Revenue at the end of the year.

The exemptions from the Universal Social Charge are:

  • All Department of Social Protection payments
  • Income that has had DIRT deducted
  • Items listed as being exempt from  USC
  • Income under €4,004 a year

Income that is exempt from tax but still liable to the Universal Social Charge:

  • Woodlands income
  • Profits from stallion fees
  • Stud greyhound services fees
  • Farmland leasing
  • Patent royalty income
  • Earnings of certain writers,artists and composers
  • Medical card holders  are  liable to the Universal Social Charge
  • Over 70s are also liable to the Universal Social Charge

The rates of Universal Social Charge are charged on a week one/month one basis and are:

  • 2% on the first €10,036
  • 4% on the next €5,980
  • 7% on the balance (Persons who reach 70 during the year and are over 70 years are not liable to the 7% rate. They pay 4%)

Jointly assessed couples: The thresholds apply to each spouse individually and cannot be combined where one is above a threshold and one is below. 

The Finance Act 2011 was published on 21st January 2011. It brought in the following additional rates for self employed taxpayers who earned over €100,000.

Under 70

  • As above up to €100,000. Then 10% on balance

Over 70 and  those with medical card

  • 2% on first €10,036
  • 4% on next €89,964
  • 7% on balance

Redundancy:

  • Statutory redundancy payments are exempt from the charge
  • Ex-Gratia redundancy payments are exempt from USC up to a certain limit. The basic limit in 2011 is up to €10,160 plus €765 per complete year of service. This can be further increased by €10,000 if the person is not a member of an occupational pension scheme.

Pensions:

  • Occupational pensions are liable for the Universal Social Charge
  • Pension contributions-the Universal Social Charge must be calculated on the gross income before the pension deduction

Leave a comment