The media has gone into its annual ‘Pension Season’ frenzy with the October 31st deadline looming but what exactly is all the fuss about?

1. Individuals who both pay and file their tax returns through the Revenue On Line Service (ROS) have until 12 November 2015 to pay a pension contribution and elect to backdate the income tax relief to the 2014 tax year. Those who do not qualify for the ROS extension must do this by 31 October 2015.
2. Personal contributions to Personal Pension Plans, PRSAs, PRSA AVCs or AVCs are deductible against an individual’s relevant earnings for Income Tax purposes up to an annual limit related to the individual’s age and net relevant earnings in the tax year. So it makes sense to pay yourself as opposed to giving it to the revenue.

Lets look at a real life example in action………..

By making a pension contribution before 31 October 2015 or 12 November 2015, you can reduce your 2014 Income Tax bill (subject to age related limits and the Revenue’s overall tax relief limits). In the following example, Joe Murphy’s final tax liability for 2014 is €10,000. Assuming that he made a Preliminary Tax payment on 31 October 2014 of €6,000, the balance of Income Tax due for 2014 on 31 October 2015 is €4,000. Let’s see how a pension contribution of €8,000 can reduce his tax bill on 31 October 2015

(Source Aviva Life & Pensions)

If reducing your tax bill is of interest to you be sure to give us a call before the October 31st Deadline. 01-6674985