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Implications of Universal Social Charge

3rd January 2011

Budget 2011 combined the income levy and the health levy into the new universal social charge (USC). Whilst the overall exchequer return is estimated to be revenue neutral, it does involve bringing more employees into the tax net. The main features of the charge are:

* The only exemption for PAYE income is if the income is less than €77 a week.
* You may have to pay the USC even if you previously were not liable to the income levy (which had a weekly exemption threshold of €289).

Previously the following thresholds existed for exemption from each levy:

Annual IncomeWeekly Income
Income Levy€15.028€289
Health Levy€26,000€500

The rates and thesholds for the universal social charge are as follows:

Annual IncomeWeekly Income
4%€10,037 – €16,016€194 – €308
7%> €16,016> €308

Therefore, an employee earning €200 a week will pay a USC of €4.14, calculated as follows:
[€193 x 2% + (€200 – €193) x 4%].

Related Articles
Budget 2011
Payroll 2011 Preparation