asked the Minister for Social Welfare the circumstances in which company directors are obliged to pay PRSI; the rates applicable; and the benefits available to them.
Written Answers. - Payment of PRSI.
61.
A company director whose income is assessable to PAYE is insurable at one or other of the PRSI contribution classes listed below; the standard percentage rate of contribution in 1989-90 which applies up to various ceilings for each class is as shown:
|
Class A |
Employer |
12.20% |
||
|
Employee |
7.75% |
|||
|
Total |
19.95% |
|||
|
Class J |
Employer |
0.50% |
||
|
Employee |
2.25% |
|||
|
Total |
2.75% |
|||
|
Class K |
Employer |
nil |
||
|
Employee |
2.25% |
|||
|
Total |
2.25% |
|||
|
Class S |
Employer |
nil |
||
|
Employee |
6.25% |
|||
|
Total |
6.25% |
Contribution Class A applies if the company director is employed under a contract of service. A contract of service exists where there is an employer/employee relationship, the employer having the right of control, direction and dismissal over the employee. A company director who is appointed to a post in the company under the company's Articles of Association and is paid for that work separately from his directorship may be employed under a contract of service. Contribution Class A provides cover for the full range of social insurance benefits and pensions.
Contribution Class J applies if the company director is employed under a contract of service but for less than 18 hours per week and does not mainly depend on the earnings from the work. It also applies to a company director who is employed under a contract of service who is aged 66 years or over. This class provides cover for occupational injuries benefit only.
Contribution Class K applies if the company director is not employed under a contract of service and is either aged 66 years or over, or has total income of less than £2,500 per annum. The percentage rate of contribution of 2.25 per cent applicable to this class represents the 1.25 per cent health contribution and the 1 per cent employment and training levy. There is no social insurance cover under this class.
Contribution Class S applies if the company director is not employed under a contract of service and has income from all sources of £2,500 or more per annum. In those circumstances the company director is regarded as a self-employed person and the Class S contribution rate of 6.25 per cent is payable. This class of contribution provides cover for old age and widow's contributory pensions and orphan's contributory allowance.
All the percentage rates applicable to the above contribution classes include health contribution (1.25 per cent) and the employment and training levy (1 per cent) and are deducted at source and paid through the PAYE/PRSI system.
In addition, a company director involved in a self-employment activity, that is a trade or profession, who pays income tax direct to the collector general in respect of the self-employment activity, for example, Schedule D, is also liable for a PRSI contribution on that income. The total income from all sources must be £2,500 or more. The percentage rate of contribution for this category in the current year is 4 per cent, which represents social insurance only. This contribution provides cover for old age and widow's contributory pensions and orphan's contributory allowance. They would also be liable for the health contribution and the employment training levies.
All self-employed contributors are liable to pay a minimum social insurance element of £208 in respect of income from all souces for the 1989-90 year.
A revised information leaflet on the insurability of company directors will shortly be published by the Department and I will arrange to have a copy forwarded to the Deputy.