The national minimum wage in Ireland will increase from €9.80 to €10.10 per hour from 1 February 2020 for people aged 20 years and older. This will have an impact on both PRSI and USC.
PRSI will be impacted as follows:
There will be no changes to the employee rates for PRSI.
There will be no change to the employee PRSI credit.
The PRSI employer threshold for class AX will change from €386 to €395 (weekly).
The PRSI contribution rates will therefore be as follows for private and some public sector employments:
As always, SimplePay takes the hassle out of compliance for our users. We have already made updates to the system to ensure that the PRSI calculation is correct, depending on the date of your payslip. This means that if you prepare payslips that are dated before 1 February 2020, the system will use the previous thresholds, while payslips dated from 1 February 2020 will use the updated thresholds. There is therefore no need for you to make any changes or updates on your end – you simply continue capturing payroll as usual.
The USC threshold for the 2% bracket will also change so that full-time minimum wage workers stay in the same USC bracket. This change will be reflected through changes in employee RPNs and will take effect on 1 March 2020.
For more information on PRSI and USC, check out our help pages here.
With the new tax year underway since 1 January, we’d like to reassure you that our system has been updated to ensure that you are always compliant with legislation. There is no need to do any manual updates as in other payroll systems – simply continue processing payslips into the new tax year. Your payroll will automatically meet all the requirements for the 2018 period, as announced in the 2018 Budget on 10 October 2017. If you are still processing payroll for the 2017 tax year, the old tax rules will still be used, as you’d expect.
Here are some of the most important changes that you may see in your payroll for the coming year:
The standard rate income tax band for all earners increased by €750. This will be reflected in your employees’ P2Cs.
The 2.5% rate of USC was reduced to 2% and the 5% rate of USC decreased to 4.75%
The National Training Fund Levy (NTFL), collected alongside Employer PRSI for Classes A and H, increased by 0.1%. This means that the total employer PRSI contribution rates for Class A employees increases from 8.5% to 8.6% for employees earning €38 – €352, and from 10.75% to 10.85% for employees earning in excess of €376.
When you need to do your filing, the correct period will automatically be used and the relevant documents will be generated. For more information, please see our help site.
We will soon send out a year-end filing guide to assist you with submitting your P35 to Revenue and issuing P60s to your employees. Alternatively, you can consult our help site for more information.
If you have any questions relating to the above changes, you are welcome to contact us to assist you with these queries.