News & Updates

Pension Tax Relief- Use it or lose it!

Date Posted: 20.09.2017

 

Tax Relief- Use it or lose it

|What should your pension planning priorities be?

The short answer, for many people, will be “use it before you lose it” – the “it” in this case being the current generous levels of tax relief on pension contributions.

Contributions are relieved at your marginal tax rate generating an immediate saving of 40%. Self employed individuals unfortunately cannot carry forward relief. You must either contribute in a given period or lose the available relief.

It is important to note that the Revenue will not allow tax relief to be backdated against 2016 earnings if you have not elected to claim the tax relief for that tax year or if your tax return has not been filed on time.

The maximum pension contributions, in any one year, for which you are entitled to tax relief, is related to your age and is expressed as a percentage of your gross income. The maximum gross income figure for relief purposes is €115,000. The maximum tax relief you receive as a % of your earnings for pensions in Ireland is set out below:

Tax Relief by Age Bracket

Under 30: 15%

30 to 39: 20%

40 to 49: 25%

50 to 54: 30%

55 to 59: 35%

60 and over:40%

For example, an employee who is aged 42 and earns €40,000 can get tax relief on annual pension contributions up to €10,000

The pay and file deadline is 10th November (for online returns), make sure to lock in your tax savings by contributing to your pension.

For further advice and information please contact our offices on 056-7721854 or gearoid@cleerelife.ie

 


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