The Universal Social Charge (USC) came into effect on 1 January 2011. It replaced both the Income Levy and?the Health Contribution. It is a tax payable on gross income, including notional pay, after relief for certain capital allowances,but before pension contributions.
There is an annual exemption threshold of ?4,004 up to?31 December 2011. This threshold increases to ?10,036 with effect from 1 January 2012 and where this amount is exceeded, all of an individual?s income is chargeable.
The rates of USC are:
? 2% on the first ?10,036
? 4% on the next ?5,980
? 7% on the balance.
However, these standard rates are modified in certain circumstances. In the case of individuals aged 70 or over, and individuals who hold full medical cards, the 4% rate applies to all income over ?10,036.
There is a surcharge of 3% on individuals who have income from self-employment that exceeds ?100,000 in a year, regardless of age. Thus, where such individuals are under 70 years and do not hold a full medical card, a rate of 10% applies to such income and where such individuals are aged over 70 years or hold a full medical card, a rate of 7% applies.
There are a very limited number of exempt categories.
The more important of these include:
? All Department of Social Protection payments and similar payments received from other countries,
? Department of Social Protection-type payments received from State Bodies such as the HSE and FAS,
? Income already subjected to DIRT