Know Your Rights

Universal Social Charge

Universal Social Charge

Question

Has there been any change to the Universal Social Charge in Budget 2012?

Answer

The Universal Social Charge (USC) is a tax payable on your gross income. It is also payable on notional income (benefit-in-kind payments) and it is deducted before pension contributions. 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 from the USC.

Everyone (including medical card holders) is liable to pay the USC if their gross income is over a certain threshold in a year. For 2012, the income threshold has increased from €4,004 to €10,036. If your income is over €10,036 you pay the USC on all your income.

There is no change to the rates of the USC which 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.

Where a new employee is paying PAYE on an emergency basis, the emergency basis rate of the USC that applies is 7% and it applies to all of the salary/wage.

For 2012 the deduction of the USC has changed to a cumulative basis, similar to the manner in which PAYE is deducted. As with PAYE tax credits and rate bands, the USC rates and thresholds to be applied to employees will be issued to employers by the Revenue Commissioners on Employer Tax Credit Certificates (P2Cs).

Know Your Rights has been compiled by Citizens Information Service which provides a free and confidential service to the public. Information is also available online at citizensinformation.ie and from the Citizens Information Phone Service, 0761 07 4000