The Universal Social Charge (USC) came into effect on 1 January 2011. It replaced both the Income Levy and the Health Contribution. It is a tax payable on gross income, including notional pay, after relief for certain capital allowances,but before pension contributions.
There is an annual exemption threshold of €4,004 up to 31 December 2011. This threshold increases to €10,036 with effect from 1 January 2012 and where this amount is exceeded, all of an individual’s income is chargeable.
The rates of USC are:
♦ 2% on the first €10,036
♦ 4% on the next €5,980
♦ 7% on the balance.
However, these standard rates are modified in certain circumstances. In the case of individuals aged 70 or over, and individuals who hold full medical cards, the 4% rate applies to all income over €10,036.
There is a surcharge of 3% on individuals who have income from self-employment that exceeds €100,000 in a year, regardless of age. Thus, where such individuals are under 70 years and do not hold a full medical card, a rate of 10% applies to such income and where such individuals are aged over 70 years or hold a full medical card, a rate of 7% applies.
There are a very limited number of exempt categories.
The more important of these include:
♦ All Department of Social Protection payments and similar payments received from other countries,
♦ Department of Social Protection-type payments received from State Bodies such as the HSE and FAS,
♦ Income already subjected to DIRT