Self-employed facing PRSI hike from 4pc to over 11pc

Article in the Independent and other outlets too of course.........

https://www.independent.ie/business/personal-finance/tax/self-employed-facing-prsi-hike-from-4pc-to-over-11pc-39531882.html

A paper was published on the 14th........ https://www.gov.ie/en/publication/fdd38-budget-2021-tsg-papers/

For the likes of self employed company directors surely the most equitable way for this would be if the PRSI was taken/paid as an employer contribution straight from the company funds (much like all other employees) rather then from the wages? The net impact is the same of course.

Calahonda52

What is a self employed company director?

Is that language used in the texts you link to?

Calahonda52

Calahonda52 wrote: »

What is a self employed company director?

..........

Someone who owns their own limited company and pays themselves a salary from it.

If the employer (the company) pays the PRSI and there's enough cash in the company then the director's wages remain the same.

If the extra 7% PRSI comes from employee PRSI then they are down net income. If they decide to work more to earn more then it's easier to replace the former

Calahonda52 wrote: »

Is that language used in the texts you link to? ..........

Nope

Rulmeq

Does this mean they will be entitled to the contributory pension then? Or is this just a return to the days when they paid PRSI and got nothing in return?

Rulmeq

Rulmeq wrote: »

Does this mean they will be entitled to the contributory pension then?.........

Self employed folk are currently entitled to the contributory pension, providing they meet the criteria, same as employees.

frozenfrozen

what should someone self employed do now so are they trying to encourage us to do something differently or is it just a 'we would like more of your money thanks'

Calahonda52

Augeo wrote: »

Someone who owns their own limited company and pays themselves a salary from it.

I see it a bit differently.
The director is an employee of the company, the director is not self employed and the difference in tax law is substantial

frozenfrozen

frozenfrozen wrote: »

.......... is it just a 'we would like more of your money thanks'

Basically..........

To put the PRSI rate paid by self-employed contributors into context, a comparison with the rate applying to employed contributors is illustrative. A combined PRSI rate of 15.05% is paid in respect of most (PRSI Class A) employees. This includes a 1% contribution to the National Training Fund.
The employee PRSI charge comprises 4% payable by employees
and 11.05% by their employer (there is an 8.8% employer PRSI rate, inclusive of the National Training Fund contribution, where weekly earnings do not exceed €395).3
Employees who pay PRSI at Class A are covered for all benefits and pensions.

&

self-employed contributors are now covered for most of the
benefits available under the social insurance scheme which represents approximately 93% of the value of all benefits paid by the SIF. In effect, self-employed contributors, in return for a contribution of 11 percentage points lower than that made in respect of employed contributors, have access to benefits which comprise over 90% of the value of all benefits available to employed contributors. Class S contributors are currently not covered for
Illness Benefit, Carer’s Benefit, Health and Safety Benefit and Occupational Injuries Benefits.


In % terms for 4% PRSI self employed folk get/qualify for 93% of the benefits ........ employed folk pay 4% also but their employer contribute another 11%.........

Calahonda52

Calahonda52 wrote: »

I see it a bit differently.
The director is an employee of the company, the director is not self employed and the difference in tax law is substantial

Right, well currently they are classed as self employed in PRSI terms........ PRSI for Company Directors
Under Section 16 of the Social Welfare and Pensions (Miscellaneous Provisions) Act 2013, proprietary directors who own or control 50% or more of the shareholding of a company, whether directly or indirectly, are subject to PRSI under Class S, which is currently 4% of gross income.

Or do you reckon proprietary directors aren't included in this PRSI increase idea/proposal?

mickdw

Augeo wrote: »

Self employed folk are currently entitled to the contributory pension, providing they meet the criteria, same as employees.

Pension is about the only thing we get.
This rise is ok if self employed get the same entitlement to benefits like employees such as non means tested immediate payment if out of work.

mickdw

mickdw wrote: »

.............. self employed get the same entitlement to benefits like employees such as non means tested immediate payment if out of work.

I can't see that happening as it would be "easy" for want of a better word to take a few weeks off and sign on every now and then.

frozenfrozen

Augeo wrote: »

Basically..........

To put the PRSI rate paid by self-employed contributors into context, a comparison with the rate applying to employed contributors is illustrative. A combined PRSI rate of 15.05% is paid in respect of most (PRSI Class A) employees. This includes a 1% contribution to the National Training Fund.
The employee PRSI charge comprises 4% payable by employees
and 11.05% by their employer (there is an 8.8% employer PRSI rate, inclusive of the National Training Fund contribution, where weekly earnings do not exceed €395).3
Employees who pay PRSI at Class A are covered for all benefits and pensions.

&

self-employed contributors are now covered for most of the
benefits available under the social insurance scheme which represents approximately 93% of the value of all benefits paid by the SIF. In effect, self-employed contributors, in return for a contribution of 11 percentage points lower than that made in respect of employed contributors, have access to benefits which comprise over 90% of the value of all benefits available to employed contributors. Class S contributors are currently not covered for
Illness Benefit, Carer’s Benefit, Health and Safety Benefit and Occupational Injuries Benefits.


In % terms for 4% PRSI self employed folk get/qualify for 93% of the benefits ........ employed folk pay 4% also but their employer contribute another 11%.........

That's crap so. As if it costs the same for a company to make up 11% on salaries while they are paying less tax on their profits compared to self employed.

Just makes it an obvious choice to go to a limited company instead of sole trader?

frozenfrozen

frozenfrozen wrote: »

......

Just makes it an obvious choice to go to a limited company instead of sole trader?

I'm not sure proprietary directors aren't included in this PRSI increase idea/proposal ......... they pay class s PRSI at 4% currently.

frozenfrozen

Augeo wrote: »

I'm not sure proprietary directors aren't included in this PRSI increase idea/proposal ......... they pay class s PRSI at 4% currently.

It's only a proposal / idea that will be put to the government as a budget option.
Taxing every shopkeeper, farmer, dentist, retail owner etc etc and extra 7% mightn't appeal to the chaps at the helm.

No mention of this in the budget thankfully