Some important notes relating to two different scenarios in December 2015 / January 2016 for USC treatment in payroll

1.  What are employers to do where they have not received 2016 P2Cs in time to run January 2016 payroll(s)?

The rates and some thresholds of the Universal Social Charge (USC) are changed with effect from 1 January 2016.  In December 2015, Revenue will issue to employers/pension providers 2016 Tax Credit Certificates (P2Cs) for all employees, advising the rates and thresholds applicable from 1 January 2016.

In the situation where an employer has not received 2016 P2Cs in time to run January 2016 payroll(s), the following instructions apply:

Tax Deductions

Employers should continue to use the 2015 P2Cs for tax deductions.

USC Deductions

Employers should continue to use the 2015 USC Cut-Off Points and apply the 2016 USC Rates (1%, 3%, 5.5% & 8%)

2. An employee commences employment in 2016 and hands in a 2015 P45 – how does the employer calculate USC deductions?

The employer should apply the USC Cut Off Points stated on the 2015 P45 on a temporary basis until such time as a 2016 P2C is received.

The USC rates to be applied are the 2016 rates – 1%, 3%, 5.5% & 8%.

We will re-post this in December and January also as it is very important

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All the best,
The Team at Jefferson