An employer contribution to a Personal Retirement Savings Account (PRSA) is a chargeable benefit-in-kind for tax purposes in the hands of the employee. As the Universal Social Charge (USC) treatment follows the income tax treatment, USC should be deducted on this employer contribution.
While these contributions are regarded as a taxable benefit in the employee’s hands, these same contributions qualify for full tax relief subject to certain age-related limits. This only relieves them from PAYE and PRSI however and the USC liability remains.
Employers should ensure that any PRSAs are set up correctly on their payroll systems to ensure that USC is deducted from employees on any employer contribution.
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