USC and Pension Contributions

Please find below a quick alert on USC treatment for pension contributions. More information can be obtained by contacting CAG Chartered Accountants, who would be happy to discuss this article relevant to your situation.

The taxation of pension contributions is some of the most complex issues that payroll personnel and employers have to deal with.

Normally Income Tax relief is available at the marginal rate of tax for pension contributions paid by an individual to the following types of pension schemes namely:  

    Occupational pension schemes   

    Retirement annuity contracts   

    Personal retirement savings accounts   

    Small self-administered pension funds   

However the USC treatment differs depending on the type of contribution to a pension. For example in some pensions, where the employer make a contribution depending on the type of pension, this employers contributions can be subject to Universal Social Charge.

If the payroll is not set up correctly this contribution can be missed when calculating USC resulting in under-deducted and underpaid USC for employees.  

Revenue are continuously doing PAYE audits and it is important you ensure there are proper procedures put in place to safeguard the correct USC treatment on pension contributions.