PRSI

Pay Related Social Insurance (PRSI) contributions are deducted from your income and used to fund certain social insurance payments, such as state pensions. There are different rates of PRSI for different categories – for example most PAYE employees pay Class A PRSI.

Self-employed people (aged between 16 and 66) usually pay Class S PRSI at 4% on all gross income (less allowable expenses) for tax purposes. You must pay 4% of all your income, or €500, whichever is greater.

Note: If you earn less than €5,000 from self-employment in a year you are exempt from PRSI, but you may pay €500 as a voluntary contributor (if you meet certain conditions).

The vast majority of self-employed people pay their tax to Revenue through the self-assessment system. However, certain categories of self-employment will pay their PRSI through the PAYE system or directly to the Department of Social Protection.

Who is self-employed?

Under PRSI Class S self-employed people are defined as:

• professional people (for example doctors, dentists, solicitors etc.)
• sole traders, people in business on their own or in partnership, farmers, religious, contractors, sub-contractors
• people with income from investments, rents or maintenance payments
• employees who are also self-employed in a trade or profession
• company directors, and others, who pay their tax through the PAYE system but who are not regarded as employees for social insurance purposes
• certain artists and childminders who have been made exempt from income tax by Revenue
• spouses or civil partners of self-employed contributors who participates in the business

Income excluded from PRSI

There are some types of income that do not have to be taken into account when you are working out what your PRSI contribution should be:

• capital allowances
• benefit income such as pensions, allowance or supplement from the Department of Social Protection
• occupational pensions
• allowances paid by the Health Service Executive
• income continuance payments that have been approved by Revenue and are received by a person forced to leave employment due to illness
• redundancy payments and early retirement bonus
• retirement lump sums in excess of €200,000 which are subject to income tax
• the early encashment of certain amounts of private pensions which are subject to income tax by individuals in the public sector who had previously been self-employed

Persons excluded from PRSI

Certain people can also be excluded from paying Class S PRSI including:

• Relatives of the self-employed (other than spouses or civil partners) who help out in the running of the business, but who are not business partners
• Those in receipt of Pre-Retirement Allowance on an ongoing basis
• People with annual income of less than €5,000
• People who are not ordinarily resident in the State with solely unearned income
• People who pay contributions at Class A and whose only self-employment income is unearned income
• People in receipt of Occupational pension whose only self-employment income is unearned income

Social Welfare

When you make a PRSI contribution (in any Class), it is recorded to determine your future entitlements to social welfare benefits.

If you are self-employed and you pay Class S PRSI contributions, you will be covered for a limited number of payments. In general, under Class S you will not be covered for any short-term payments including illness and disability payments. It also does not cover you for Jobseeker's Benefit.

However, Class S contributions can entitle you to:

• Maternity and Paternity Benefit
• Adoptive Benefit
• Widow's, Widower's or Surviving Civil Partner's (Contributory) Pension
• Guardian's payment (Contributory)
• State Pension (Contributory)
• Treatment Benefit, (Dental, Optical and Aural) 

Note: You can't claim your State Pension (Contributory) until all necessary payments have been made. If you are aged over 66 and you still owe Class S PRSI contributions, your State Pension (Contributory) will only be paid from the date that you have paid all outstanding contributions and any outstanding income taxes in full.

Voluntary contributions

Self-employed people who are not liable to pay PRSI may be eligible to become a voluntary contributor, subject to meeting certain conditions.

Voluntary contributions allow you to remain insured once you leave the compulsory PRSI system. You may choose to pay voluntary contributions, provided you meet certain conditions including if you:

• are no longer covered by a PRSI scheme on a compulsory basis in Ireland
• are no longer covered by a PRSI scheme on a compulsory or voluntary basis in any other E.U. country
• are under age 66
• satisfy the scheme's qualifying conditions

PRSI for share fishermen

A share fisherman (or woman) (who is classed as self-employed), may choose to pay an additional PRSI contribution at Class P. This contribution provides cover beyond normal Class S PRSI benefits including:

• Limited Jobseeker's Benefit (up to 13 weeks in each calendar year)
• Limited Illness Benefit (up to 52 weeks)
• Treatment Benefit, for their dependent spouse/civil partner

The rate of Class P contribution is 4% of income, subject to the income ceiling applied to self-employed contributors. This contribution is additional to the normal Class S payment made by the contributor. In order to remain a Class P contributor a person must continue to be liable for Class S PRSI and ensure that all payments due are up-to-date.

PRSI Refunds

A refund of PRSI is payable to a self-employed contributor who has reached the age of 56 years on or before 6 April 1988, paid PRSI for the first time on or after that date and does not qualify for either a State Pension (contributory) or State Pension (non-contributory). The refund payable is 53% of PRSI paid, which is the pension element of Class S PRSI contributions.

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