Combination of Sch.D and E / PRSI / Levy

[dandecombine]

Hi,

I've come up with nothing on the search, but I may be terrible at searchin, so apologies if this is well walked ground.

My question revolves around facts like the following.

Schedule E earnings are E50,000 with, lets just say, E1000 income levy paid and, say, E3000 paid by way of PRSI and all PAYE taken care of.

Schedule D earnings are E50,000.

Now, my initial thinking was that E has all been taken care of, so all I need to do is assess the E50,000 on D on whatever PRSI rate applies to that E50,000 and pay the income levy as appropriate on that E50,000.

However, I'm wondering if this involves underpayment on both fronts. On income levy, for example, I pay X under E on the basis I earn 50K and then I pay Y under D on the basis I earn 50K when its probably the case that I should be paying whatever rate (probably in excess of X+Y) on 100K.

Should I, instead, be aggregating both sets of income to see what overall "level" I am at for PRSI / Income Levy? If so, how does one go about assessing the relevant rate?

Any guidance appreciated

 

[xanadu1]

If you use the online form 11, it will work this out for you. The way it works it out is, well, surprising, but I'm assured that it's correct.

 

[dandecombine]

Thanks,

But for all sorts of reasons including my own general interest, I'd like to know the principles if anyone has insight. I've been wondering maybe I'm wrong to think that there is a difference between the Payroll and Self-Assessment basis for the levy, as the 1.67% rate looks like it was desiged to compensate for 1/3 year on 1% and 2/3 year at 2%. It doesn't work out quite like that though (maybe because the year doesn't divide nicely?)

Example below assues 54,808 in the year (no particular source)
On payroll basis

15,836 (Jan to April) 1% 158.35

38,972 (May to December) 2% 779.44

937.79


On self-assessed basis

54,808 1.67% 915.30

Hmmmm.

I have never, ever liked aggreating the D and E and I bet I'm over complicating it terribly.

 

[dandecombine]

out of interest why is it surprising? surprising too high, too low etc?

 

[dandecombine]

After keeping at this for a while, the Revenue Guide to Completing 2009 Form 11 suggests the following (see around pages 62 et seq)

It appears that one does not aggregate D and E to arrive at a D PRSI liability. So, if you make 50K on D and 70K on E, you simply pay your PRSI at 3% on the 50K and that's that. See example 7, page 64.

For Health Contribution, similarly, you simply assess it on D and D alone.

Income Levy, on the other hand, appears quite different. From all the examples, it appears your bottom line Levy liability is calculated on all gross income. So, one abstractly assess liability on combined D and E on the self-assessment basis and then, one assumes, anything actually paid is deducted from that.

I have a sneaky feeling that something is up on the income levy, but I assume smarter people than me can say its perfectly fine. There seems to be a reasonable difference between how X is assessed on the dual budget payroll basis versus how X is assessed on the ex-post facto self-assessment basis. Nevertheless, the methodology is quite clear in the Revenue examples.

 

[xanadu1]

Income Levy, on the other hand, appears quite different. From all the examples, it appears your bottom line Levy liability is calculated on all gross income. So, one abstractly assess liability on combined D and E on the self-assessment basis and then, one assumes, anything actually paid is deducted from that.

Yep, if I recall correctly, that's more or less what the website does in its calculation. It's a bit odd, though, and it seems like someone whose salary changed during the year would be effected strangely.