Payroll Changes
New USC Rules
Although Budget 2012 did not make any changes to the income tax rates and credits there were some small changes to how the Universal Social Charge is deducted.
The main change is that the USC will now be collected on a cumulative basis as opposed to on a weekly basis. The reason behind the change was that some employees were overpaying USC. This was happening particularly with employees who joined during the year or where weekly pay fluctuated. Overpayments were not corrected until the last payroll run of the year when the employee would be refunded any overpayment of USC during the year. By moving to a cumulative basis this will no longer occur.
As an employer you must apply the USC rate and band as per your employee’s tax certificate, you cannot manually correct the USC. So, the issue here is that should you spot an incorrect rate or band on any of your employees’ tax certs you should advise them to contact the tax office to correct the mistake and re-issue a new tax cert.
Specifics on the rates and bands for USC can be found on Revenues website.
2012 P45’s
The layout of the P45 form, the form an employee receives when they leave a job has changed for 2012. This means that any paper P45’s you may have on file from previous years cannot be used in 2012.
Where an employee left their job in 2011 they would have received a P45 showing tax paid and a separate USC certificate showing the USC paid. For 2012 onwards the P45 will also show the USC information so a separate USC certificate will no longer be required. Where a new staff member joins in 2012 their P45 from the previous employment should show the USC paid in the year. This information will now need to be input into the payroll package when setting up the new employee to ensure the USC is calculated correctly. If you are using a payroll package this should be automatically updated. If you are doing a P45 manually, contact the Revenue Commissioners for the new version.
