Ceiling for PRSI payments jumps from 52,000 to 75,000

PAY Related Social Insurance will now be payable on €75,000 of a person’s income instead of the pre-budget ceiling of €52,000.

From May 1, while the 4% PRSI charge remains the same, it is to be paid on all monies earned to just over e75,000.

According to KPMG tax expert Michael Lynch, the hardest hit will be a married person with one income.

“The person hardest hit would be working in the private sector and earning about e70,000, and with a mortgage. They will be the worst hit. They may have already had a 10% pay cut and are now losing another 6% to 7%.”

The new PRSI ceiling means that for a married couple with one income and no children earning e75,000, payments will increase from e1,894 to e2,736.

For a married couple with one income, two children under the age of five, earning e100,000, PRSI contributions rise from e1,940 to e2,802.

For a single person earning e75,000, it increases from e1,894 to e2,736.

Mr Lynch said the biggest disappointment in relation to PRSI was not so much the increase of the ceiling, but the fact that no relief was given for employers.

He said employers needed a 18-24 month “holiday” from this payment.

“Every employer pays PRSI for every employee which is up to 10.75%. They need a break from this to get back on track.

“We all appreciate there needs to be raising of taxes and Brian Lenihan had a six-point plan, but I’m not sure job retention was in that plan.” Mr Lynch said employers could not afford to take on new staff — or even retain present numbers — because of high PRSI payments.

Paul Brady, consultant with Astons Tax & Legal Consultancy firm, said that middle-income earners have been hit hard and could perceive themselves as suffering the most.