I am a single, retired 68-year-old individual. My main source of income is rental income from a commercial premises, supplemented with a reduced State contributory pension (I was a homemaker for many years).
My 2026 tax credit and universal social charge certificate lists my tax credits as €2,000 personal tax credit and €2,000 employee credit (even though I am no longer in PAYE employment) and an age tax credit of €245.
Despite turning 66 after January 1st, 2024, and being in receipt of the State contributory pension, I am still being charged PRSI at a rate of 4.1 per cent on my income.
I am in the process of putting together all the information required to complete Form 11 in respect of the tax year 2025 and reading the prepopulated sections of that form, it would appear I am going to be charged PRSI at the rate of 4.1 per cent again in respect of my income for 2025.
Is there anything I can do to rectify this?
GA
You appear to have fallen through the cracks here, which is not great given that you are already on a reduced State pension.
The rules on PRSI – Ireland’s social insurance – are very clear. Anyone in employment who is over the age of 16 and below the age of 66 will pay PRSI, unless their earnings are less than €38 a week.
If you are over the age of 66, you can still be charged PRSI if you are in employment and not drawing down the State pension. This covers people availing of the recently introduced provision to defer taking your State pension in return for getting a slightly higher weekly payment.
As of now, you can choose to defer drawing down your pension for one year or more – up to a maximum of you turning 70. But certainly once you turn 70, at the latest, PRSI should not be an issue.
The deferral option is actually directed at people such as you who are entitled to receive less than the full State pension payment and want to boost their eligibility, but most advisers will tell you that, at current rates, it is poor value for money, presuming you at least meet the requirements for a minimum State pension payment.
How it works
PRSI is also levied on people who are self-employed or in receipt of “unearned income”, such as rental from a property, like yourself. While most employees pay PRSI at class A, one of 11 different PRSI categories, people who are self-employed or in receipt of unearned income of more than €5,000 in a year pay PRSI under class S.
PRSI goes to fund a range of social welfare payments, including the State pension. Each PRSI class offers slightly different benefits but there are not many material differences between class A and class S.
The rate at which you pay PRSI is the same under both classes, even though your employer would also pay PRSI on your earnings if you were an employee.
The PRSI rates have been on the rise in recent years as the Government looks to beef up the social insurance fund from which benefits are paid – not least to compensate for its refusal to countenance raising the State pension age, having run into serious political flak when that was signalled some years ago.
As recently as 2024, the employee rate was 4 per cent. It rose to 4.1 per cent in October 2024 and 4.2 per cent in October last year. It will rise again this October to 4.35 per cent and then to 4.5 per cent from October 2027 and 4.7 per cent from October 2028.
The one key thing from your point of view is you stop paying PRSI once you start drawing down the State pension, regardless of your income.
And yet, here you are, at 68, still being charged. That shouldn’t happen.
Exemption
It doesn’t matter whether you were doing a part-time job or, as you are, receiving rental income. Once you are on the State pension, you are exempt from PRSI.
I got in touch with the Department of Social Protection and its position was quite clear.
“This person states that they are in receipt of rental income and are in the process of completing their 2025 tax returns. The information given suggests that the reader has been in receipt of the State pension (Contributory) since 2024. Given these details, once the reader finalises their 2025 tax return, PRSI will not be charged on their income.”
So, regardless of what how your Form 11 – the tax return for or people who are self-employed or in receipt of unearned income in excess of €5,000 – says, you are not due to pay PRSI.
I am not sure why your form would be prepopulated with an obligation to pay PRSI when Revenue knows your age and should know from your 2024 return that you are in receipt of a State pension. I can only assume whatever computer programme prepopulates the Revenue Form 11s has not been programmed to take account of that nuance.
However, there is a box in the personal details section of your online Form 11 that you can tick to indicate you are entitled to an exemption from PRSI. You’ll need to state why. Putting in that you are in receipt of the State pension should see the form reset itself so that it no longer seeks to charge you in the section that calculates the taxes you owe.
I gather that, since we spoke initially, you have been in touch with Revenue and this is now sorted in your case, but it is worth mentioning for others out there who might find themselves in the same position. Tax forms have a habit of making the best of us doubt ourselves.
Given that you were charged PRSI in 2024 when you actually started drawing down your State pension, that money should have been refunded to you. If it has not been, you should contact Revenue seeking a refund – though you would have been liable to PRSI up to the date in 2024 when you started to draw down the pension.
For anyone else who finds themselves in a similar situation, the Department of Social Protection also said it was happy to look into such cases. Anyone looking to have their case examined would need to make sure they provide their details, including, critically, the PPS number.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to dominic.coyle@irishtimes.com with a contact phone number. This column is a reader service and is not intended to replace professional advice.