How does tax relief on pension contributions work ?
You can get Income Tax relief against earnings from your employment or trade for your pension contributions (including Additional Voluntary Contributions (AVCs).
Tax relief is given on the income tax rate you are paying tax on your last euro of earnings either 20% or 40%
There is no relief from USC or PRSI only income tax
There are two limits on how much tax relief you get
- Age related pension limits going from 15% for under 30 years to 40% for over 60 years
- Max earnings you can claim on is €115,000
You may pay a once-off, or special, contribution after the end of a tax year. This must be done before the following 31 October.
If you make this payment, you can choose to have the tax relief for the contributions allowed in the earlier tax year. This must also be carried out before 31 October of the following year.
So this is a useful relief if you have any spare monies which are not getting a decent return on investment especially coming up to October of each year.
Tax relief is claimed back on either form 12 or 11 and must be returned to revenue by the income tax deadline of 31st October each year
If the tax return is late for any reason you will not be able to claim the said tax relief on pension
Any queries on same give me a call on 091 763817 or email oliver@taxreturnhelp.ie