Earning Less but Paying More? Universal Social Charge Question

TeddyRuxpin

Hi all,

I’m hoping that someone there can explain this to me, and perhaps offer some advice. Please be aware that I am not trying to cheat the system but I do need to understand what’s happening.

I have just received my first paycheck with the new Universal Social Charge and, as expected, got my cut like everyone else. Now, I’m on a salary of 26K per year and the cut is an extra €181 euro off my pay per month, €2,172 per year (8.79%), which I was expecting (sadly). I was ok with that, until….

I discussed this with my housemates (both in the private sector) and I was left very confused/annoyed when I discovered:
Housemate A: Income of €30K (pays into a pension before tax) is only paying €30.
Housemate B: Income of €29K (no pension) paying €40.

How is this charge worked out?! Is it a mistake by their employers? They’ve showed me their seen their pay slips and can’t figure it out! I fully understand that this new tax is affecting a lot of people far worse than me (I’ve no children/mortgage/etc) but the fact that someone in the same boat as me is earning more but paying less is extremely disheartening.

If I start paying into a pension (effectively lowering my take-home pay), would that reduce the money taken off me for this bank bailout tax? I’d much prefer losing out on €200 euro a month if €150/160 was going into a pension rather than have all €181 taken by the government.

Once again, I whole heartedly apologise if this offends anyone who is in a worse position than me because of the new cuts, but I need to understand this.
I’m so angry with how we all have been treated that, even though I am a complete home-bird, who never imagined living outside of Ireland and away from my friends/family, I spent a long time this weekend discussing emigrating to New Zealand/Australia with my girlfriend. For the first time in my 27 years on this planet, it sickens me living on this island - nothing to do with the people living on it, just the ones running it.

Thank you.

BarMcc

In 2010 pay below €26,000 was exempt from the health levy. If pay was over this amount the health levy was charged on entire amount. In 2011 the health levy has been abolished and replaced with USC. As this applies at lower thresholds people on €26,000 will now pay USC. People over this will pay the USC but will get some relief by not paying the health levy. So someone on €25k will see a bigger cut in their take home pay compared to someone on €28k

Ogham

Those figures have to be wrong.

UsC on 26k a year should be 95 a month
The old income & health levies would have been about 43 a month
Income tax will have gone up by 30 a month
Your net pay should have dropped by about 81 a month to 1849 ish not by 181 -

USC is based on gross pay before pension deduction

Those people on 29k and 30k will be paying USC of 112 and 118 a month.
The one on 29k will have no change to take home pay though. Can't comment on the other one because I don't know the pension amount.

See http://www.moneyguideireland.com/calculation-of-universal-social-charge-usc.html

namenotavailablE

I have uploaded a basic USC calculator here- http://taxcalc.eu/monthlyss.

On a salary of €26000, the annual USC is €1139. On €29,000 it's €1349 and on €30000 it's €1419.

All of these values presume that the recipients are not holding a full medical card and are aged under 70.