If I earned less in my job, I'd get more net pay

Cathalog

Due to the Irish tax system, I'd have a greater net pay if I had a lower gross salary.

I'm not earning a large sum of money as I'm only doing an internship. But it turns out that I'm only just over the cut-off for paying PRSI. Therefore I have to pay 4% on ALL of my salary as apposed to paying 0%.

This doesn't make any sense!

People earning around 12k in a year would also run into a similar issue with USC.

Why don't we implement a system where we pay 0% PAYE / USC on the first bit of income we receive and then start paying tax on anything over that?

Greenmachine

Cathalog wrote: »

Due to the Irish tax system, I'd have a greater net pay if I had a lower gross salary.

I'm not earning a large sum of money as I'm only doing an internship. But it turns out that I'm only just over the cut-off for paying PRSI. Therefore I have to pay 4% on ALL of my salary as apposed to paying 0%.

This doesn't make any sense!

People earning around 12k in a year would also run into a similar issue with USC.

Why don't we implement a system where we pay 0% PAYE / USC on the first bit of income we receive and then start paying tax on anything over that?

I guess you are earning about €20k a year. I think you need to earn above about €21k per year before you take home more than minimum wage assuming you work the entire tax year.

Cathalog

Greenmachine wrote: »

I guess you are earning about €20k a year. I think you need to earn above about €21k per year before you take home more than minimum wage assuming you work the entire tax year.

I believe it's 18 or 19k.

I'm only working the summer, so that explains how I'm earning over the minimum wage.

Edit: Is the minimum wage the minimum gross wage or net wage?

Eugene Norman

You'll probably end up paying 0% tax when reclaimed.

Sam Kade

Op do you know that you have to have so many prsi contributions to get the contributory pension lots of people that aren't in the tax net make voluntary contributions.

relax carry on

Cathalog wrote: »

Due to the Irish tax system, I'd have a greater net pay if I had a lower gross salary.

I'm not earning a large sum of money as I'm only doing an internship. But it turns out that I'm only just over the cut-off for paying PRSI. Therefore I have to pay 4% on ALL of my salary as apposed to paying 0%.

This doesn't make any sense!

People earning around 12k in a year would also run into a similar issue with USC.

Why don't we implement a system where we pay 0% PAYE / USC on the first bit of income we receive and then start paying tax on anything over that?

The PAYE system as it exists now means with the basic paye and Personal Tax credits you only pay paye over 16500 euro, you then pay 20% on anything up to 33800 and anything over that is 41%. This over the entire tax year January to December. Your PRSI contributions go towards your contributory state pension and or Jobseekers benefit if you need it.

Deise Vu

You pay 0% Prsi up to €352 and your employer pays 8.5%. Above €352 you pay 4% on everything ie €1 pay rise gives you a prsi liability of €14.12!!! Even worse from €356 pw (bizarrely €4 higher) your employer rate goes to 10.75%. So a €4 pay rise sees your net pay decrease by over a tenner and the cost to your employer is your €4 increase plus over €8 in additional employers PRSI. ie it costs €12 to give you €10 less.

I am not making this up. It is our PAYE system.

The reason you don't hear anything about this is doubly sinister. One it is an incentive to employers to keep employees below €18,304 pa (zero hours contracts, part-time etc) and the other reason is public servants employed prior to 1995 aren't in the prsi net and therefore the decision makers basically don't give a rats ass about the stupidity of Prsi because the only effect on them is it helps to keep the cost of groceries down (CF Dunnes, Tescos etc where this sort of pay is rampant and they are only too well aware of it).

You could add in a third reason. Trade Unions only represent public sector workers with any enthusiasm, they have long ago given up on the private sector and are happy enough to stop trains and busses and threaten electricity supply every now and then.

mickdaly

Ask them to lower your gross slightly until your net goes up due to lower/no PRSI - look up Citizens Information website regarding low pay, entitlements etc. National Organisation of the Unemployed has a very good information section as well. Wouldn't worry about PRSI as it's a summer job. Watch your monthly outgoings as well - shop around - like a pay rise in effect.
Always ask yourself: Can I pay less (get more) for this item/service?

Cathalog

Sam Kade wrote: »

Op do you know that you have to have so many prsi contributions to get the contributory pension lots of people that aren't in the tax net make voluntary contributions.

I'll worry about that when I'm older and working full-time. For now, I'm a student earning a reasonable (but small) amount, a state pension is the last thing on my mind! I'm very lucky to be in a booming job sector so job seekers fund is also something that isn't on my mind right now.

Cathalog

Eugene Norman wrote: »

You'll probably end up paying 0% tax when reclaimed.

This is untrue. PAYE PRSI is calculated on a weekly basis. So, I can't claim anything back.

I can claim USC, however, as it's done on a yearly basis.

Cathalog

Deise Vu wrote: »

You pay 0% Prsi up to €352 and your employer pays 8.5%. Above €352 you pay 4% on everything ie €1 pay rise gives you a prsi liability of €14.12!!! Even worse from €356 pw (bizarrely €4 higher) your employer rate goes to 10.75%. So a €4 pay rise sees your net pay decrease by over a tenner and the cost to your employer is your €4 increase plus over €8 in additional employers PRSI. ie it costs €12 to give you €10 less.

I am not making this up. It is our PAYE system.

The reason you don't hear anything about this is doubly sinister. One it is an incentive to employers to keep employees below €18,304 pa (zero hours contracts, part-time etc) and the other reason is public servants employed prior to 1995 aren't in the prsi net and therefore the decision makers basically don't give a rats ass about the stupidity of Prsi because the only effect on them is it helps to keep the cost of groceries down (CF Dunnes, Tescos etc where this sort of pay is rampant and they are only too well aware of it).

You could add in a third reason. Trade Unions only represent public sector workers with any enthusiasm, they have long ago given up on the private sector and are happy enough to stop trains and busses and threaten electricity supply every now and then.

Source for this information is here (for anyone reading): https://welfare.ie/en/Pages/Class-A-2015.aspx

Cathalog

relax carry on wrote: »

The PAYE system as it exists now means with the basic paye and Personal Tax credits you only pay paye over 16500 euro, you then pay 20% on anything up to 33800 and anything over that is 41%. This over the entire tax year January to December. Your PRSI contributions go towards your contributory state pension and or Jobseekers benefit if you need it.

I made no mention of PAYE in this thread. I don't pay any PAYE yet, and I shouldn't.

The issue is with PRSI.

mickdaly wrote: »

Ask them to lower your gross slightly until your net goes up due to lower/no PRSI - look up Citizens Information website regarding low pay, entitlements etc. National Organisation of the Unemployed has a very good information section as well. Wouldn't worry about PRSI as it's a summer job. Watch your monthly outgoings as well - shop around - like a pay rise in effect.
Always ask yourself: Can I pay less (get more) for this item/service?

While I very much appreciate the advice, I'm young, and don't have many bills/responsibilities, so I'm financially sound. That isn't the point of this thread.

My point is, that if I was paid less by my employer, I would get more money into my hand. How does that make any sense?

Eugene Norman

Cathalog wrote: »

I made no mention of PAYE in this thread. I don't pay any PAYE yet, and I shouldn't.

The issue is with PRSI.



While I very much appreciate the advice, I'm young, and don't have many bills/responsibilities, so I'm financially sound. That isn't the point of this thread.

My point is, that if I was paid less by my employer, I would get more money into my hand. How does that make any sense?

There are anomalies in all tax systems around cut off points. And stop your whining. The PRSI you may not isn't actually going into a fund to pay your future pension. It's paying someone's pension now just as someone will be paying your pension in the future, just as people paid for your schooling.

I think we take too many people out of the tax system as is.

Cathalog

Eugene Norman wrote: »

There are anomalies in all tax systems around cut off points. And stop your whining. The PRSI you may not isn't actually going into a fund to pay your future pension. It's paying someone's pension now just as someone will be paying your pension in the future, just as people paid for your schooling.

I think we take too many people out of the tax system as is.

Well, Revenue managed to implement a simple and effective system for PAYE with no cut-off anomalies. I don't understand why the Welfare office can implement a similar system for PRSI?

It's very simple.
You pay 0% on your first X income.
You then pay a percentage on the income from X to Y.

X in this case could be €352 and Y could be €500 or whatever.

Very simple.

This is not about me whining. I'm making the point that the system is flawed.

mickdaly

INOU website gives advice on in job entitlements as well as advice for the jobless.

Surely your PAYE is looked at on a yearly basis (tax year) as once it has passed, you can then claim back tax for that tax year if the amount paid is under the threshold for the rate of deduction, tax-free allowance etc. Never hurts to put in a claim once the tax year finishes.

Get your P45 and look out later for your P60 (statement of earnings and tax deducted) when leaving. This should be posted to you by the firm, follow it up after tax year ends.

You'll be an expert after all the research online. Ask can you return in the Christmas or Easter holidays as well - a few days pay is always welcome.

mickdaly

Ask your parents if there's any bills/responsibilities.........
All tax systems have unfair aspects - trick is to get to know them and work around them to your benefit. Think politicians are happy enough to avoid reform in case their stash is looked at, all their expenses, tax write-offs etc. I agree it should all be much simpler, cheaper to administer etc.
Build up some savings whilst you're working now. Don't forget a contribution to home costs and when you fall on hard times (may happen sometime in your life) you'll have cash in the bank at least.

Deise Vu

Jesus, OP has a simple straightforward point, I don't know where the last few posts are coming from. If you earn €353 you take home €13 less than someone earning €352. That is utterly ridiculous. It is also a very simple point to grasp to all of you who are suggesting he is anti pensions / pensioners or that he should get a second job, donate to a sperm bank etc.

Fear Ciarrai

Cathalog wrote:

This is untrue. PAYE is calculated on a weekly basis. So, I can't claim anything back.

So you are on week 1 basis rather than cumulative?

barneystinson

Deise Vu wrote: »

Jesus, OP has a simple straightforward point, I don't know where the last few posts are coming from. If you earn €353 you take home €13 less than someone earning €352. That is utterly ridiculous. It is also a very simple point to grasp to all of you who are suggesting he is anti pensions / pensioners or that he should get a second job, donate to a sperm bank etc.

It is an anomaly and it's unpleasant for anyone caught in it, but it only catches a very narrow band of earnings, between €352 to about €368 weekly.

Worth bearing in mind that since PRSI works on a pay period basis, it'll only affect people paid hourly, in a week where their gross falls into that bracket, or people on a salary of between about 18,300 and 19,130(ish) p.a.

The difficulty is due to having a class of people outside of the scope of the PRSI charge. A graduated scale that starts from zero is the only realistic solution, but that would p1ss off the many to appease the few...

thesimpsons

Cathalog wrote: »

This is untrue. PAYE is calculated on a weekly basis. So, I can't claim anything back.

I can claim USC, however, as it's done on a yearly basis.

PAYE is normally on a cumulative basis and does also allow for claiming items back (eg medical expenses) at the end of the year. If you are not on a cumulative basis and are on week 1 instead, you need to contact Revenue and ask why.

Cathalog

Fear Ciarrai wrote: »

So you are on week 1 basis rather than cumulative?

thesimpsons wrote: »

PAYE is normally on a cumulative basis and does also allow for claiming items back (eg medical expenses) at the end of the year. If you are not on a cumulative basis and are on week 1 instead, you need to contact Revenue and ask why.

Sorry, that was my mistake. I meant to say that PRSI is calculated on a weekly bases.

My PAYE and tax credits are fine.