Class S social insurance (PRSI)
Pay Related Social Insurance (PRSI) contributions are deducted from your income and used to fund social insurance payments, for example, State pensions. There are different rates of PRSI for different categories. If you are self-employed, you pay PRSI at a lower rate called Class S. Most employees pay Class A PRSI.
People who pay Class S include farmers, professional people, certain company directors, people in business on their own or in partnerships and people with income from investments, rents or maintenance payments. Employees who are also self-employed in a trade or profession pay Class S PRSI on that income as well as their PRSI contribution as an employee.
What PRSI do self-employed people pay?
If you are aged between 16 and 66 you pay Class S PRSI of 4% on all your income for tax purposes, that is gross income less allowable expenses. You must pay 4% of all your income or €500, whichever is greater.
If you earn less than €5,000 from self-employment in a year you are exempt from PRSI, but you may pay €500 as a voluntary contributor.
In 2013 the minimum annual PRSI contribution for people with annual self-employed income over €5,000 increased from €253 per annum to €500 and the flat-rate voluntary contribution paid by a formerly self-employed person increased from €253 to €500.
What benefits do I get from it?
Class S contributions only cover you for a limited number of payments. In general they do not cover you for any short-term payments including illness and disability payments. They do not cover you for Jobseeker's Benefit. If you satisfy all the other conditions, you can claim
- Maternity Benefit
- Adoptive Benefit
- Widow's, Widower's or Surviving Civil Partner's (Contributory) Pension
- State Pension (Contributory)
- Bereavement Grant
How do I register for PRSI?
You should inform Revenue that you are now self-employed and you wish to register for self-assessment. You can do this by completing Form TR1 - Tax Registration form for Sole Traders, Trusts and Partnerships (pdf) to register for income tax.
When you register for self-assessment with Revenue you will automatically become registered for PRSI purposes with the Department of Social Protection.
Form TR1 can also be used to register for employers' PAYE and PRSI and VAT, if you need to do so at this stage. The equivalent form for companies is Form TR2.
In 2012 the Department of Social Protection published a leaflet PRSI for the Self-Employed - SW74.
I am working with my wife. Do we both pay PRSI?
If your wife is working with you but is not legally a partner in the business, she cannot pay PRSI at all, as she is what is termed a prescribed relative.
Prescribed relatives are defined as spouses, civil partners, parents and children.
Can she pay PRSI if she becomes a partner?
Yes. She will then pay Class S and will qualify for benefits as above, including the State Pension (Contributory). The Department of Social Protection has a booklet Working with your spouse: how it affects your social welfare contributions and entitlements - SW124 which gives more information on business partnerships between married couples.
Your local City or County Enterprise Board can give you advice on all the legal matters concerned with setting up in business, including partnerships.
How do I pay PRSI?
If you are self-employed, you pay Class S social insurance contributions directly to Revenue, when you send in your tax returns for the year. Revenue then pays the money into the Social Insurance Fund and sends a record of the contributions you have paid to the Department of Social Protection.
If I go out of business, can I get Class S PRSI credits?
There is no such thing as a Class S credit. You pay Class S contributions in an annual payment for your full tax year. There is no mechanism for awarding credits for a full year or part of a year.
Can I pay Class S PRSI if I am getting Jobseeker’s Allowance?
You can continue to pay Class S contributions if you are still self-employed as long as your income from self-employment exceeds the €5,000 insurability threshold. Otherwise you can pay voluntary contributions which can help you to maintain your social insurance record and qualify for long-term social insurance pensions in the future, such as State Pension (Contributory).
Can I pay voluntary contributions?
You can find out about using voluntary contributions to maintain your social insurance record in our document, Voluntary social insurance contributions.
What about other income that I may have?
in 2014 all unearned income such as rental income, investment income, dividends and interest on deposits and savings is liable to PRSI.
If you are self-employed you pay a Class S contribution on any unearned income.
If you are neither employed nor self-employed and therefore have no earned income, you may have to pay Class S contributions on your unearned income (such as income from investments, rent or maintenance payments).
People who pay other classes of PRSI generally pay PRSI at Class K on their unearned income from rents, investments, dividends and interest on deposits and savings (if they are considered a 'chargeable person').
I owe Revenue for some tax. Can I still claim my State Pension?
No, you can't claim your State Pension (Contributory) until all outstanding payments have been made. If you are aged over 66 and still owe Class S PRSI contributions, your State Pension (Contributory) will only be paid from the date that you have paid all outstanding contributions and any outstanding income taxes in full.