Wednesday, January 5, 2011

The New Universal Social Charge!

The Universal Social Charge is a new tax payable on your gross income. It is payable on notional income (benefit in kind payments) and it is deducted before pension contributions. It replaces the health contribution and the income levy and comes into effect on 1 January 2011. It does not replace the Pay Related Social Insurance (PRSI) system.

Everyone (including medical card holders) is liable to pay the Universal Social Charge if their gross income is over the threshold of €4,004 in a year. All Department of Social Protection payments (including State pensions and Child Benefit) and similar payments (for example, CE schemes and Back to Education Allowance) and income on which DIRT has been paid are exempt.

The rates of the Universal Social Charge are:
2% on the first €10,036
4% on the next €5,980
7% on the balance

People over 70 are not liable for the 7% rate but pay at 2% on income up to €10,036 and at 4% on all their income above €10,036.

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