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It doesn't surprise us in the least that a lot of employees and payroll departments are still confused about the Universal Social Charge, the rates that apply and who is and who is not impacted by it. While we are still waiting for Revenue to issue regulations relating to the administration of some aspects of the USC, as is provided by the legislation, the following is a useful guide for the treatment of the Universal Social Charge.

With effect from 1 January 2011, the USC merged the Health Levy with the Income Levy (both of which are now abolished).

The charge will apply to an individual’s income before pension contributions, donations and certain capital allowances. In addition, the USC will also apply to gains arising from share schemes including:-

• Approved Profit Sharing Schemes
• Approved Save-As-You-Earn Schemes
• Approved and Unapproved Share Option Schemes

The USC rates applicable for 2011 are as follows:-

 

It should be noted that where an individual’s annual income is below €4,004, a USC will not apply. However, once the annual income exceeds €4,004, the USC is applied to the full amount of income.

The USC is capped at 4% for individuals that hold a medical card.

As soon as there is further clarification to the administration of this charge, or indeed, if there are any amendments to the USC following the introduction of the next government, we will update you via this blog.