Tax Related Changes – Payroll 2016

USC
The rates and bands for USC calculations have changed for 2016. The new rates and bands are as follows;

PRSI
Employees:
Employees earning between €352.01 and €424 in a week and who pay Class A PRSI, will be entitled to a new weekly PRSI Credit which will reduce the amount of PRSI deducted from their earnings in that week. (A similar PRSI Credit will apply to Class E and Class H employees with weekly earnings between €352.01 and €422 or €424, respectively.)
There will be no changes for Employees earning over €424 in a week and paying PRSI under Class A and Employees paying PRSI under Classes B, C, D, or J.

Employers:
Employers of Class A employees earning between €356.01 and €376.00 in a week will pay employer PRSI at the rate of 8.5%, from 1 January 2016.
There will be no changes for employers of Class A employees earning over €376 in a week, or for employers of employees paying PRSI under other PRSI classes.

Self-employed/Other Contributors:
There will be no changes for contributors paying PRSI Class S or for contributors paying PRSI under other PRSI classes (i.e. Classes K or M).

What if you have not received 2016 P2Cs in time to run January 2016 payroll(s)?
The rates and thresholds of the Universal Social Charge (USC) are changed with effect from 1 January 2016. In December 2015, Revenue will issue to employers/pension providers 2016 Tax Credit Certificates (P2Cs) for all
employees, advising the rates and thresholds applicable from 1 January 2016.
In the situation where an employer has not received 2016 P2Cs in time to run January 2016 payroll(s), the following instructions apply:

Tax Deductions
Employers should continue to use the 2015 P2Cs for tax deductions.

USC Deductions
Employers should continue to use the 2015 USC Cut-Off Points and apply the 2016 USC Rates (1%, 3%, 5.5% & 8%).

USC Exemption
Where USC Exemption was advised in the 2015 P2C, employers/pension providers should continue to apply USC Exemption from 1 January 2016, until the 2016 P2C is received.

Emergency Basis Deduction of USC
Where the emergency basis of USC deduction applied, employers/pension providers should continue to apply the emergency basis of USC from 1 January 2016, until the 2016 P2C is received. The 2016 emergency USC rate is 8%.