Universal Social Charge (USC)

USC operates in the same manner as PAYE, varying by employee:

 
  • USC rates and Cut Off Points (COP) are issued per employee
  • Employers are advised of these rates and COPs along with the calculation basis on the P2C file
  • Employers should not alter treatment from the P2C instruction unless a new P2C is issued
  • Employers should not change how an employee is treated for USC based on personal circumstances (medical card/over70)
 
EMPLOYERS ARE TO OPERATE USC STRICTLY ON THE EMPLOYEE ASSIGNED USC RATES AND CUT-OFF POINTS AS ADVISED BY REVENUE IN THE P2C FILE, WITHOUT EXCEPTION. 
 
 

P2C File 

Employer Tax Credit Certificates (P2Cs), display PAYE credits and cut off points and also USC rates and cut-off points.    
 
 

P45 and P45 Supplement

The Forms P45 and P45 Supplement include USC details. 
 
 

Individuals aged 70 and over whose aggregate income is less than €60,000

and

Individuals who hold full medical cards whose aggregate income is less than €60,000

It is NOT the responsibility of the employer to determine amendments to the operation of USC based on an employee’s personal circumstances.  Where lower rates of USC apply in certain circumstances, for example, in the case of employees aged 70 and over whose aggregate income is less than €60,000, or where employees hold full medical cards whose aggregate income is less that €60,000, these lower rates will be stated on the P2C issued by Revenue. Where lower rates are not stated on the P2C file currently held, the employee should be advised to contact their local Revenue office in order to update their USC status with Revenue.
  
 

USC Exemption

The 2017 USC exemption income threshold is €13,000.
Where Revenue determines that a USC exemption applies, it will be advised to the employer on the P2C file. The employer does not make any adjustment unless advised to do so via the P2C/Tax Credit Certificate issued to them for an employee. 
 
 

USC Emergency basis

No cut-off points are allowed. The emergency rate of USC is the highest rate applicable to a PAYE employee, currently 8% for 2017.  While the rules applicable to emergency tax operable in PAYE include a gradual escalation in emergency tax rates over a given period, in USC there is just a flat % rate (with no cut-off point) applied to all payments.
 
 
 

What are employers to do where they have not received 2017 P2Cs in time to run January 2017 payroll(s)?

The rates and some thresholds of the Universal Social Charge (USC) are changed with effect from 1 January 2017.  In December 2016, Revenue issue to employers/pension providers 2017 Tax Credit Certificates (P2Cs) for all employees, advising the rates and thresholds applicable from 1st January 2017.
 
In the situation where an employer has not received 2017 P2Cs in time to run January/February 2017 payroll(s), the following instructions should apply:
 
Tax Deductions:
 
Employers should continue to use the 2016 P2Cs for tax deductions.

USC Deductions: 
 
Employers should continue to use the 2016 USC Cut-Off Points and apply the 2017 USC Rates (1.5%, 2.5%, 5% & 8%)
 
 
                                                                                   

Thesaurus Payroll Manager will automatically apply the above 2017 rules on import from 2016 as appropriate. 

  • Where reduced rates (1% & 3%) were advised in the 2016 P2C, employers should use the COPS from the 2016 P2C and apply the 2017 rates from 1 January 2017, until the 2017 P2C is received

Thesaurus Payroll Manager will automatically apply the above 2017 rules on import from 2016 as appropriate. 

  • Where USC Exemption was advised in the 2016 P2C, employers should continue to apply USC Exemption from 1 January 2017, until the 2017 P2C is received. 
  • Where the emergency basis of USC deduction applied, employers/pension providers should continue to apply the emergency basis of USC from 1 January 2017, until the 2017 P2C is received. The 2017 emergency USC rate is 8%. 
  
It is imperative that once 2017 P2C files are received by an employer that they are imported to 2017 Thesaurus Payroll Manager immediately and before any further payroll is updated.  
 
 

EMPLOYEES COMMENCING EMPLOYMENT

When a new employee starts in your employment and provides you with a 2016 P45 with standard rates, employers should continue to use the 2016 COPs and apply the 2017 rates on the temporary basis. They are to be used on a week 1/month 1 basis until advised otherwise by Revenue on the P2C file.
 
The Revenue screen facilitates the recording of the additional USC information from the P45.  (This section should only be completed when the P45 is for the current tax year)
 
 
 
  
Where the week 1 basis is used, the tax credits and cut-off points (both tax and USC) information on the P45 can be used on a week 1 basis but the previous pay, tax, pay for USC and USC deducted should not be used to operate the cumulative system. The previous pay, tax, pay for USC and USC deducted will be notified to the employer on the P2C issued by Revenue. 
  

USC EXEMPTION MARKER

The annual income exemption threshold of €13,000 applies for 2017, the process of employee self election to Revenue still applies.
 
Where Revenue determine that the employee/pensioner’s total annual earnings (from all USC-able sources) will not exceed the USC exemption threshold of €13,000, the USC exemption will be stated on the P2C issued by Revenue. This USC exemption marker is an instruction to the employer/pension provider not to deduct USC from payments being made.
 
Where the employer holds a P2C which does not show exemption and the employee/pensioner advises them that USC exemption applies to them, the employee/pensioner must contact Revenue themselves to inform Revenue that their earnings will not exceed €13,000 in the tax year.  Revenue will then issue a revised P2C to the employer with an updated USC instruction.
 
Once a new P2C is used to the employer which indicates that USC exemption is to be operated then any previous USC deducted will be refunded to the employee on the subsequent payslip.
  

CALCULATING USC ON WEEK 53

Where a week 53 occurs an additional period of USC threshold is allocated to the employee on a week 1 basis.  
 
 
*** Please note, if an employee's normal pay day has changed during this tax year or the preceding tax year, the
additional USC cut off points do not apply. You will need to instruct the software if the additional USC cut off
points are not applicable to an employee. To prevent the additional USC cut off points being allocated go to
Employees > Add/Amend Employees > Select the employee > Click the Revenue Details tab > Tick to
indicate exemptions/exclusions apply > tick to exclude the employee from the week 53 USC concession >
update to save the change. 
 
 
  

Need help? Support is available at 01 8352074 or support@thesaurus.ie.

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