Reduction in Lower Rate of Employer
As part of the jobs initiative announced by the government the lower rate of employer’s PRSI is to be reduced from 8.5% to 4.25%. This change takes affect from the 1st July 2011.
It is important to note that this reduction is a tax saving for the employer and does not affect the take home pay of the employee.
The reduced rate will apply to employer’s PRSI on employees who does not earn more than €356 per week (PRSI class A0/AX).
Example
Employee A is on €350 gross pay per week. Currently employer’s PRSI of 8.5% would be liable on this gross pay (€29.75 per week). From the 1st July 2011 the employers PRSI will be reduced to 4.25% (€14.88 per week). This is a saving of €14.87 per week to the employer.
If you are using a payroll software package it is important to install an update to this software for this new lower rate of employer’s PRSI. There are no changes to PRSI for staff who earn more than €356 per week.
Read more common questions here on our tax and accountancy blog
