In Budget 2012 – the wage level below which you are exempt from the USC was raised to just over €10000 .
But – there was also another change to the way USC is deducted from pay which is also taking effect from Jan 2012
When the Universal Social Charge (USC) began it was operated on what is known as “a week-one” basis. This meant that USC was deducted from each payment of weekly wages/salary, where the payment is greater than the exemption limit.
This method – can in some cases , result in an underpayment of the USC. This happens, in particular, where a person has multiple employments or where wages vary a lot over the course of a year.
From January 2012 – employers will have to deduct the USC in a similar way to Income Tax – on a full “cumulative basis” . The government calculate they will take in €50 million more USC each year because of this change. This is slightly more than the reduction in USC employees will pay as a result of the raising of the earnings limit.
Example : A person has two jobs in the course of the year , each paying €8500 salary.
Using the old system – it would be very possible that each employment would be dealt with in isolation and the person would pay no USC at all (Each job Under the 10000 limit)
BUT – Under a cumulative system – the USC on €17000 a year would be automatically deducted – about €509