A whistle-stop tour of PRSI for ContractorsPosted Tuesday, November 20, 2018
We get lots of questions on PRSI and what workers are entitled to. PRSI is a big, big area so for this article I’m focussing only on Class A and Class S PRSI and how Contractors are affected. Let’s get stuck in…
What is PRSI
Pay Related Social Insurance is a contribution made by the employee and employer. It is based on a percentage of your earnings and funds social welfare benefits.
What are the rates of PRSI?
This article was written in 2018 and at that time we know that the following rates applied;
Personal PRSI for Contractors is 4% (assumption that you are earning more than €22,048 per annum). This will stay the same for 2019.
Employers PRSI rate 1: 8.7% (where employee salary is €19,552 or less) (2019: €20,072 or less)
Employers PRSI rate 2: 10.95% (where employee salary is in excess of €19,552) (2019: €20,072)
Are all PRSI entitlements the same?
No. Contractors using an Umbrella (PAYE) Solution will pay ‘A Class’ PRSI. Contractors using the Umbrella (Director) Solution or using their own Personal Limited Company will pay ‘S Class PRSI’.
Class A PRSI is the top-tier or PRSI. It covers you for all entitlements (subject to some personal criteria) and this is why many employees sometimes hesitate before taking a contract role.
Class S PRSI typically covers to following (again subject to some personal criteria);
Jobseekers Benefit (cover kicks in from Quarter 4, 2019)
State Pension (Contributory)
Treatment Benefit Scheme
Widow(er) / Surviving Civil Partner (Contributory) Pension
When do I stop paying PRSI?
Once you reach age 66 you no longer have to pay PRSI. This applies to employees and self-employed contractors. If you don’t have enough contributions for full benefits by age 66, then you cannot add to them after that.
You can however make additional voluntary PRSI contributions before age 66. The amount is dependent on your personal work history and circumstances. You should contact your local Social Welfare office for more details on this.
I’m worried about leaving PAYE employment because of losing my PRSI benefits
Don’t be. The first thing to note is you don’t lose your benefits over-night. There’s a ‘look-back’ period which means you can be a self-employed contractor for about 2 years before you lose all your Class A PRSI entitlements (that is assuming you’d paid enough stamps to be eligible in the first place). As a contractor you’ll earn more money. We also get to know you and the expenses you incur for work. Our goal is about maximising your take-home pay. Contracting PLUS clients have a higher average retention rate than any of our competitors. We’re the biggest Solutions provider, doing this for the longest time and are experts in keeping contractors compliant.