PRSI Update January 2014

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A number of changes came into effect in respect of PRSI from 1 January 2014 and a couple of these have been highlighted below:

PRSI on Investment Income

It was announced during the Budget 2013 speech that there would be a broadening of the PRSI base to cover certain non-employment income for specified persons. Historically employed contributors (who typically paid Class A PRSI) and occupational pensioners (who paid Class M PRSI), who were not separately self employed, would not have been liable to PRSI on unearned income (i.e. deposit interest or rental income). In the case of persons who were self employed contributors (such as sole traders or certain company directors), they were always liable to PRSI on unearned income.

However the position for such persons has now changed, as a result of new provisions introduced in the Social Welfare and Pensions Act, 2013. Now the persons affected will be liable to PRSI (currently 4%). This change will only apply to persons within the charge to PRSI (i.e. between the ages of 16 and 66) and also will only affect chargeable persons. This would not affect a person whose gross non-PAYE income is less than €50,000, their net assessable income is less than €3,174 and where this income is coded onto their Tax Credit Certificate (thereby being taxed through the PAYE system).

Employer’s PRSI

As part of the Government’s Jobs Initiative in 2011, the rate of Employer’s PRSI for persons earning less than €356 per week had been halved to 4.25%. This rate was to expire on 31 December 2013, and no extension has been provided for. Therefore the rate has gone back to 8.5% effective from 1 January.

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