What deductions to make?!

Jessica C

Hi there,

I want to employ someone for 15 hours per week, at a gross rate of €10 per hour. Do I need to deduct 8.5% for PRSI (Class A0) and 2% for USC? Is there anything else I need to do?

Many thanks!

Alan Shore

Check out www.employmentrights.ie for details of your obligations.
You at least need a contract of employment, payslips and a record of hours worked.

You need to apply to the Local tax office for a cert of tax credits and standard rate cut off to determine how much PAYE to deduct.
PRSI works on the gross pay. http://www.welfare.ie/EN/Publications/SW14/SW14_11/Pages/ClassA.aspx
0 - 352 Employee 0% Employers PRSI 8.5% You do not deduct employers PRSI from the gross pay.
USC 2% on 150 per week
0

namenotavailablE

The precise deductions depend on the employee's tax credits and SRCOP - you should be notified of these values by the Revenue Commissioners.

Assuming the employee is a single person with totally standard credits/ SRCOP available for this employment, you are correct in your calculation of USC.

Edit: You are also correct in your calculation of employer's PRSI which isn't deducted from the employee's pay but is paid by you as an additional cost of employment as detailed above by Alan Shore and below by maddogcollins

Jessica C

Thanks for the replies, I will do a contract etc, its more the tax stuff that Im struggling with!

The USC seems straight forward enough, and will wait for the tax credits cert for the PAYE but, assuming Class AO for PRSI I dont deduct 8.4% from the gross hourly rate, I must pay that on top of the rate?

Thanks!!

maddogcollins

As stated it will depend on tax credits.Assuming the employee has full single & PAYE credit and cut off then you will only deduct the 2% USC as the tax credits will cover the liability to PAYE.

The 8.5% is employer PRSI which is 150x8.5%=12.75. This is to be paid by you, the employer and not deducted from the employee.

AO means the employee pays no PRSI.

Meaning the total cost to you off employing someone is there Gross + erPRSI, in this case 150+12.75=162.75

If as above full single & PAYE credits apply:

Total Gross : €150.00
USC: (€3.00)
Net Pay €147.00

erPRSI €12.75

Jessica C

Fantastic, thank you! I think I have a much better understanding now!!

thesimpsons

why don't you download a free payroll package from Sage and it'll do all the calculations and keep you up to date with all the calculations, deductations, reports, etc. Its free for up to 5 employees and you don't need special paper for payslips or anything.

I've no affiliation with Sage or anything but I've used it for small company in the past and takes the worry out of wondering if you've accounted for everything in the payroll area.