PRSI on Savings Accounts in 2014

In Budget 2013 it was announced that some people would have to pay 4% PRSI on the interest earned on deposit accounts from January 2014. At the time it wasn’t clear exactly who this affected or how the PRSI would be deducted. See PRSI Changes in Budget 2013

Now – over a year later , after Budget  2014 , it has become a bit clearer how these PRSI  charges of 4% will operate.

The change affects only some people who earn income and pay tax through the PAYE system. Currently – PAYE earners are not liable for PRSI on unearned income such as rent or interest.

Any self employed person who fills in an income tax self assessment form should already be declaring deposit interest and should already be paying PRSI on it.

From January 2014 PAYE individuals (under the age of 66) with unearned  income exceeding €3,174 a year must pay and file under Revenue’s self-assesment  system  Their unearned income will become liable to PRSI at 4% . This includes interest, dividends and rental income.
(Note:  To earn interest over €3174  a year – you would need to have €100,000 earning more than 3.174 % interest.)

PRSI will  not be deducted by banks – it will be charged by Revenue.

PRSI will be charged at at 4% (Class K). This new PRSI charge will not give rise to any social insurance benefits.

If you are wondering what happens to PAYE earners who have /rental income  or  interest less than €3174 . Well – these individuals are currently supposed to inform Revenue of the extra income and have the tax liability on such income effectively assessed within PAYE by means of coding in the income against their tax credits. This will continue to be the case – but no PRSI will be deducted on the unearned income via the PAYE system.

One thought on “PRSI on Savings Accounts in 2014

  1. “PRSI will be deducted at at 4% (Class K). This new PRSI charge will not give rise to any social insurance benefits”

    So you have to pay social insurance but you get no social insurance benefits in return. Nice one, Enda

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