An Opportunity to Reduce your 2015 Income Tax Bill
Individuals who both pay and file their tax returns through the Revenue On-line Service (ROS) have until Thursday 10th November 2016 to pay a pension contribution and elect to backdate the income tax relief against the 2015 tax year. Those who do not qualify for the ROS extension must do this by 31st October 2016.
How Much Can You Contribute to a Personal Pension, PRSA, PRSA AVC or AVC?
For contributions paid in 2016 and set against 2015 earnings, an earnings cap of €115,000 applies for tax relief purposes to total contributions to PRSAs, Personal Pensions and Employee / AVC contributions to Occupational Pension schemes.
Who Can Contribute?
· The self-employed,
· Proprietary Directors (those who own more than 15% of a company)
· People with non-PAYE income
If you are already in an Occupational Pension Scheme you can also reduce your 2015 tax bill by making an AVC single premium on or before 31st October 2016.
Who can claim Income Tax Relief on AVCs or PRSA AVCs?
Income tax relief on AVCs or PRSA AVCs can be claimed by individuals who are:
· Employees (Schedule E, PAYE and a member of a company pension scheme)
· Directors of companies (Schedule E, PAYE and a member of a company pension scheme)
Examples of Schedule E income would include salary, bonuses and benefit-in-kind (BIK).
Where a client has changed employment this may affect their ability to make a pension contribution and backdate the tax relief to the previous year. Once a client leaves an employment where they were a member of a company pension scheme, they cannot make any further pension contributions in respect of the earnings from that employment.
Note: a termination payment made on leaving employment is not considered remuneration for pension purposes. This would include termination payments on redundancy, payment in lieu of notice and other ex-gratia payments. However, part or all of such a termination payment may qualify for tax relief under other available exemptions.
To check if you’re eligible to reduce your tax or receive a rebate for 2015, while helping to fund your pension, contact Michael on 086 8440541 or email firstname.lastname@example.org
Michael Keville T/A MK Financial is regulated by the Central Bank of Ireland