The Universal Social Charge (USC) replaced both the income levy and the health levy (health contribution) since 1 January 2011.
The Health levy applied to reckonable earnings, reckonable emoluments and reckonable income. Reckonable emoluments mean employment income. Reckonable earnings are income from employment. Since 2004 non-pecuniary income such as benefit, and kinds are included.
Contributions to pension schemes are deducted. No expenses or allowances are deductible in computing income subject to the levy.
Reckonable income for health contributions means the aggregate income from all sources in accordance with income tax less pension contribution. After 2004 the rules also apply to benefits in kind. Losses cannot be deducted against income for the purpose of the contribution.
It applies to self-employed contributors. Certain income including artist exemption, stallion exemption from income tax did not apply to health contribution. Some sources of income exempt from income tax and also exempt from levies. The levies are collected through the PAYE system. The levies may be payable with preliminary tax.
Liability to contributions apply separately to each spouse. Income is calculated separately in each case. This is the case irrespective of whether the parties are assessed jointly or singly.
Income from ordinary deposit accounts is subject to levies. Income from certain special savings account is exempt.
The levy does not apply to dividends paid from an Irish source to non-residents. It does not apply to the taxation applicable to life insurance and offshore funds.
The levies apply to income remitted to Ireland earned by non-domiciled resident individuals. After 2008 the remittance basis applies to UK source income so that it is only taxed if remitted.
The income levy, which came into effect on 1 January 2009, was a levy payable on gross income, including notional pay, before any relief for any capital allowances, losses or pension contributions.
All individuals were liable to pay the income levy if their gross income exceeds the threshold of €15,028 p.a., (€289 per week) or if they exceed the income exemption limit of €20,000 p.a. for an individual aged
65 or over.
In the specific circumstances where an employer or pension provider has already applied the higher exemption limit of €352 to weekly payments made prior to 1 May 2009 (using the annual threshold of €18,304 as set out in the Finance (No. 2) Act 2008) Revenue will not seek to recover any underpayment of levy for this period arising as a result of the application of this higher exemption. This special provision only applied in respect of payments actually made in the period between 1 January 2009 and 30 April 2009.
- where an individual’s total income for a year does not exceed €15,028 p.a.
- full medical card holders
- social welfare payments were excluded
- Individuals aged 65 or over whose annual income did not exceed €20,000
At the end of the year, a refund of any income levy paid was due from Revenue where a married couple:
– is taxed under joint assessment or separate assessment, and
– one or both of whom are aged 65 or over in the year, and
– has combined gross income from all sources of less than twice the single threshold (2 x €20,000)
- all social welfare payments including social welfare payments received from abroad
- ayments that are made in lieu of social welfare payments such as Community Employment
- Schemes paid by the Department of Enterprise and Employment or Back to Education Allowance paid by the Department of Education.
- income subjected to DIRT