531AN Rate of charge

Summary

This section describes the rates at which an individual’s aggregate income is to be charged to USC. The standard rates and bands are set out in a Table. These standard rates and bands are modified in certain circumstances.

Details

(1) Subject to subsections (2), (3) and (4), an individual is charged to USC on his or her aggregate income for a year of assessment at the rates set out in the Table to this section.

The standard rates, that apply to most individuals, are set out in Part 1 of the Table to this section. These are–

Reduced rates apply to individuals aged 70 and over whose aggregate income does not exceed €60,000 as set out in Part 2 of the Table to this section. These are-

However, subsections (2) and (3) modify these rates in certain circumstances.

(2) A 3% surcharge applies where an individual has relevant income (i.e. essentially non-PAYE income) that exceeds €100,000 in a year of assessment. The excess is charged at the rate of 11%.

(2A) Gains made on the exercise of share options (although chargeable to Schedule E under section 128(2), not paid through PAYE) are excluded from “relevant income” and are thus not chargeable to the 3% surcharge imposed by subsection (2).

(3) An individual who is aged under 70 with aggregate income not exceeding €60,000 and who is eligible for a full medical card (whether under the specified Irish law or EU law) is charged to USC at a maximum rate of 2% on the amount of his or her aggregate income that exceeds €21,295 for the year of assessment 2022.

(3A) Where an individual encashes his or her private pension rights, the “encashment amount” that is ring-fenced under Schedule D Case IV by section 787TA is charged in full at a rate of 2% and is not regarded as “relevant income” for the purposes of the 3% surcharge imposed by subsection (2).

(4) The reduced rate of USC for those full medical card holders aged under 70 and whose income does not exceed €60,000 and shall cease to have effect from the year of assessment 2023 onwards.

(5) In the case of relevant emoluments that are paid on 31 December (or 30/31 December in a leap year), commonly known as a week 53 payment, the rate bands set out in the Table to this section are to be increased by 1/52 where relevant emoluments consist of weekly pay and 1/26 where the relevant emoluments consist of fortnightly pay.

However, where the actual payments of relevant emoluments on those days are less than the increases provided above, the increase in the rates bands is restricted to the actual amount of the relevant emoluments.

In the exceptional circumstance where an individual is in receipt of income from 2 separate employers which both give rise to week 53 payments, only one increase (i.e. 1/52 or 1/26) applies.

(6) Following on from subsection (5), the income figures in subsection (1) and (3) are also expanded by 1/52 or 1/26, as appropriate. In addition, the exemption threshold in section 531AM(2) is also expanded by 1/52 or 1/26, as appropriate.

However, where the actual payments of relevant emoluments on those days are less than the expansion provided above, the expansion is restricted to the actual amount of the relevant emoluments.

(7) This is an anti-avoidance provision to prevent pay dates being changed or manipulated with a view to benefiting from the widened rate bands. Subsections (5) and (6) do not apply where the normal pay date in the year, or the previous year, has changed, or, where the pay date occurs on 31 December (or 30/31 December in a leap year) and that date is not the normal pay date.

(8) The normal pay date is the day during the weekly or fortnightly pay cycle, as the case may be, on which relevant emoluments are usually paid to the individual.

Relevant Date: Finance Act 2021