Pay Related Social Insurance (PRSI) for the self-employed was introduced in 1988. All self-employed people aged between 16 years and 66 with earnings more than a specified amount (currently €5,000 per annum) must pay PRSI. The class of PRSI contribution paid by self-employed people is Class S.
When you commence self-employment, you must first register as a self-employed person with the Revenue Commissioners under their self-assessment system. Under self-assessment, at the end of each tax year you will submit your annual end of year returns and Revenue will assess your liability for income tax, PRSI and USC based on the information that you have supplied. Any amounts due under self-assessment are paid directly to Revenue.
The vast majority of self-employed people are dealt with under the self-assessment system. However, certain categories of self-employed people pay PRSI under Revenue’s PAYE system or in certain circumstances, self-employed PRSI is collected directly by the Department of Social Protection. See Paragraph 7 below for specific detail about non self-assessed cases.
If you are in doubt as to whether you are employed or self-employed you should contact your local offices of the Revenue Commissioners or the Scope Section of the Department of Social Protection for assistance and advice. See Code of Practice for determining the Employment or Self-Employment status of individuals for further information.
1. Who pays Class S PRSI?
PRSI Class S is paid by self-employed people such as:
farmers, professional people (for example, doctors, dentists, solicitors etc.),
people in business on their own or in partnerships, religious, contractors, sub-contractors carrying on independent businesses,
people with income from investments, rents or maintenance payments
employees who are also self-employed in a trade or profession pay Class S PRSI as well as their PRSI contribution as an employee
company directors, motorcycle couriers etc. who pay their tax through the PAYE system but who are not regarded as employees for social insurance purposes
with effect from 1st January 2017, Local Authority members (City and County Councillors) with reckonable emoluments from their Local Authority positions
2. What benefits may I get by paying Class S PRSI?
PRSI Class S provides cover for:
Widow’s and Widower’s or Surviving Civil Partner (Contributory) Pension
Guardian’s Payment (Contributory)
State Pension (Contributory)
Treatment Benefit [Dental, Optical and Aural] with effect from 27th March 2017
Class S PRSI does not provide cover for other schemes like Jobseekers Benefit, Illness Benefit and the Invalidity Pension.
3. Who does not pay Class S PRSI?
The following people do not pay PRSI at Class S:
‘prescribed relatives’ (father, mother, grandfather, grandmother, stepfather, stepmother, son, daughter, grandson, granddaughter, stepson, stepdaughter, brother, sister, half-brother, half-sister of the self-employed contributor) who help a self-employed person with their business but who are not partners in the business*,
* If you employ a ‘prescribed relative’ you must contact the Scope Section, Department of Social Protection, Telephone (01) 6732585 or email firstname.lastname@example.org for a decision on the relative’s social insurance contribution,
people getting Pre-Retirement Allowance on an ongoing basis,
people whose total income from self-employment and employment (if applicable) is below a certain amount (currently €5,000 a year),
people insured as employees whose only incomes under self-employment are classified as unearned income, such as share dividend payments or rents,
occupational pensioners, whose only incomes are classified as unearned, and people classified by Revenue as non-resident who hold solely unearned income.
4. Do I pay PRSI on all income?
You pay PRSI only on your reckonable income, which includes:
income from a trade or profession,
interest, annuities and income from foreign investments, such as property,
rent from any property in Ireland,
income from which tax has already been deducted such as, annuities, bank or building society interest, maintenance payments,
income from share dividends and other payments received from companies based in Ireland, and
certain taxable income from employment (for example, company directors, motorcycle couriers), minus any superannuation/pension contributions that are approved by Revenue.
You may have to pay PRSI on both earned and unearned income.
5. What is excluded from reckonable income?
The following types of income are not considered when working out your PRSI contribution:
• capital allowances,
• approved superannuation contributions for self-employed people who pay their income tax under the PAYE system,
• any social welfare payments or benefits,
• Infectious Diseases Maintenance Allowance or Mobility Allowance paid by the Health Service Executive,
• occupational pensions,
• any payments made to:
Members of the Dáil or Seanad
Members of the European Parliament
State officials such as Labour Court members, the Comptroller and Auditor General, Harbour Commissioners, etc.,
• any income continuance payments approved by Revenue that are received by a person forced to leave employment due to illness. and
• redundancy payments, ‘golden hand shake’ payments and early retirement bonuses.
6. What amount of PRSI do I pay?
Your contribution is 4% of your reckonable income or an annual minimum charge of €500, whichever is greater. Under the self assessment system, PRSI is paid directly to Revenue together with any other amount due. See section on PRSI rates for full details.
7. Categories of self-employed people not covered by self-assessment.
If you are a self employed company director, PRSI is deducted by your employer under the PAYE system. Although the PRSI of a company director is deducted by his/her employer it is the responsibility of each company director to ensure that the correct amount of PRSI has been deducted and paid to Revenue.
No Net Liability (NNL) Cases
If you have been advised by an Inspector of Taxes that you are not required to make a Tax Return under self-assessment, but your self-employment income is €5,000 or more per year, you are liable to pay a flat rate social insurance contribution to the Department of Social Protection.
8. Special scheme for share fishermen
If you are a share fisherman or woman who is classified as self-employed, you may choose to pay an additional contribution for certain benefits under PRSI Class P. You will pay a contribution of 4% of income in addition to the PRSI being paid already under Class S. There is a PRSI free allowance of €2,500 in those specific circumstances.
These additional contributions paid under Class P provide cover for:
limited Jobseeker’s Benefit (for up to 13 weeks in each calendar year)
limited Illness Benefit (for up to 52 weeks)
Treatment Benefit including dental, optical and aural benefits for themselves and their dependent spouses.
9. What happens if I am no longer self-employed?
If you are no longer liable to pay Class S PRSI (for example, if you stop being self-employed or if your income falls below the €5,000 annual liability threshold) and you are aged under age 66, you may apply to become a voluntary contributor.
Voluntary contributions give cover for the pensions that you were covered for when you were last working and paying compulsory PRSI.
For more details about the Voluntary Contribution Scheme see the information booklet SW8 or contact:
Department of Social Protection
Client Eligibility Services
Locall: 1890 690 690
10. Can I get a PRSI refund?
If you reached age 56 on or before 6th April 1988, and you paid PRSI for the first time on or after that date and you do not qualify for a State Contributory or a Non Contributory Pension, you may get a refund of the pension element (53%) of the PRSI Class S contributions that you have paid. Applications for this refund should be sent to Client Eligibility Services(see address at Paragraph 12 below.)
11. How do I register as a self-employed person?
If you become self-employed you must register under self-assessment with the Revenue Commissioners for PRSI purposes. It is not necessary to register with the Department of Social Protection. However, if your only source of self-employed income is from a company directorship, you do not need to register as under self-assessment because your tax and PRSI will be collected under Revenue’s PAYE system.
12. Where can I get more information?
For more information on PRSI for the self-employed, contact your local Intreo Centre, your Social Welfare Branch Office or the Client Eligibility are at:
Department of Social Protection
Client Eligibility Services
Locall: 1890 690 690
See also information booklet PRSI for the Self Employed – SW74