The Important Difference between PRSI Class A & Class S

Thinking of giving up your day job and running your own business? Then you should be aware of the PRSI differences in rates and entitlements when you move from employment to self-employment.

PRSI (pay related social insurance) is paid by employers, employees, individuals with self–employment income of €5,000 or more and certain other individuals, such as those in receipt of occupation pensions. The amount paid is used to fund social insurance (welfare) payments.

There are many classes of PRSI with various rates and entitlement to benefits. The current classes and rates of PRSI are beyond the scope of this blog post and can be found on the Department of Social Protection website.

In this post I want to concentrate on two common classes of PRSI:

Class A which applies to most employments

Class S which generally applies to self-employed individuals and directors who have a controlling interest in their company
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PRSI Rates

The rate of PRSI to be paid under each class are as follows:

Class A: Employment Income

Weekly earnings

Employee PRSI

Employer PRSI

€38 to €352 inclusive

NIL

4.25%

€352.01 to €356 inclusive

4.00%

4.25%

€356.01 and over

4.00%

10.75%

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PRSI is dealt with under the PAYE system. Employee PRSI is deducted from an employee’s wages. Employers PRSI is paid by the employer.
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Class S: Self Employment Income of €5,000 or more

4% of all income. From 1 January 2013, there is a minimum PRSI payment per year of €500.

Self-employed individuals pay PRSI in their annual tax return. Directors on class S will be dealt with under the PAYE system.
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Entitlements

When it comes to social welfare entitlements there is a vast difference between class A and class S as follows:
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Social welfare benefits and pensions under Class A PRSI

• State Pension (Transition) – formerly Retirement Pension
• State Pension (Contributory) – formerly Old Age (Contributory) Pension
• Widow’s/Widower’s (Contributory) Pension
• Guardian’s Payment (Contributory)
• Invalidity Pension
• Occupational Injuries Benefits
• Treatment Benefit (Dental or Optical)
• Jobseeker’s Benefit
• Illness Benefit
• Carer’s Benefit
• Maternity Benefit
• Adoptive Benefit
• Health and Safety Benefit
• Bereavement Grant

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Social welfare benefits and pensions under Class S PRSI

• State Pension (Contributory) – formerly Old Age (Contributory) Pension
• Guardian’s Payment (Contributory)
• Widow’s or Widower’s (Contributory) Pension
• Maternity Benefit
• Adoptive Benefit
• Bereavement Grant

A full description of each benefit and its qualifying criteria can be found on the Department of Social Protection website.
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Under either class, you may be entitled to Job Seekers Allowance provided you meet the conditions.

So, if you are thinking of heading down the self-employment route, it is worth bearing in mind the differences in class A and class S PRSI.

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4 thoughts on “The Important Difference between PRSI Class A & Class S

  1. simona rusnakova Reply

    Very clear and helpful information, Orla, thanks for the overview! People might not be aware of what they are losing once they leave the class A PRSI…

  2. Eoin Ryan Reply

    Hi Orla,

    Thanks for detailing this. Is there any opportunity for people that are self employed to pay stamps in Class A, or not?

    • Orla Linehan Reply

      Hi Eoin,

      Unfortunately, a self-employed person (sole trader) can only pay PRSI at class S. It is an issue that the Advisory Group on Tax and Social Welfare has been asked to examine: http://debates.oireachtas.ie/dail/2012/05/09/00084.asp

      Regarding limited companies, if a director is receiving a salary as an employee of a company and does not have a controlling interest in the company, then he/she may be able to pay at Class A. As most small Irish companies are owned and controlled by family members, it can be difficult not to have a controlling interest.

      Directors’ fees (for sitting on the board etc) are always at Class S.

      This is a complex area and advice would need to be sought to ensure that the correct PRSI class is applied.

      Best regards,

      Orla

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