Tax Relief Query

D

Daddy

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I am working 5 days and earning 50k and get tax relief of 41% on pension contributions.

If I was to go on a 3 day week and be earing 30k do I only get tax relief of 20% on any contributions or would I continue to get 41% ?

My wife is earning 75k and pays in to a pension also at work.

We are jointly assessed.

Thanks
 
Thanks - what must I earn to get 41% relief then ? Am I near a threshold that if i earn over it I would get the top rate tax relief ?
 
I think that SBarrett's advice is pure wrong.

In your circumstances, the first €23,800 of income of the spouse earning the lower income is subject to basic rate (20%) tax with the balance subject to the higher rate of 41%. In simple terms, if your taxable income is €30,000 - then the first €6,200 that you pay into a pension will qualify for 41% relief so long as this is within the allowable age related % relief, as set out below....

Age Amount which qualifies for tax relief
Under 30 years 15% of net relevant earnings
30 to 39 years 20%
40 to 49 years 25%
50 to 54 years: 30%
55 to 59 years 35%
60 and over 40%
 
Thanks for clarification to first reply. The lower earner me in this case is 56 years old. You might tell me please where the 6,200 is derived from.
 
Hey Daddy!

The €6,200 comes from the difference between your taxable earnings of 30k and the income subject to basic rate tax of €23,800. Does this make sense?
 
Daddy said:
I am working 5 days and earning 50k and get tax relief of 41% on pension contributions.

If I was to go on a 3 day week and be earing 30k do I only get tax relief of 20% on any contributions or would I continue to get 41% ?

My wife is earning 75k and pays in to a pension also at work.

We are jointly assessed.

Thanks
Click to expand...
Just remember that if ur 30 k is not all taxable, depending on how you and the boss deal with your txac credits, then u may not get the full 6.2k at 41%.
http://www.revenue.ie/en/tax/it/reliefs/pension-contributions.html
 
Hi Irocha, 30k is gross so I have tax credits after that. As for mammy we are jointly assessed so can you elaborate if you can when you say I may not get the full 6.2k at 41%.
 
Hey Daddy

I've got to head out so unfortunately I don't have the time to elaborate further on why you are entitled to tax relief on the full €6.2k at the 41% rate - hopefully some other kind folk will be able to put your mind at ease....
 
Thanks as still a bit confused. My standard rate cut off at 311213 was annual 33,653 so if I earn 30k on a three day week still not sure how I can claim 6,200 of a pension contrib at 41%.
 
You can transfer a portion of your std rate band to your wife, so that 33k figure can be reduced to 23,800.

If your gross is 30k and your cut-off point is 23,800 then in the absence of the pension contribution you'd pay tax at 41% on the 6,200 of earnings in excess of the cut-off.

So on any amount you contribute up to the full 6,200, you'll save tax at the 41% rate.

And on the other side your wife whose earnings are unchanged will be paying about 2k less in tax by virtue of the extra std rate band you've transferred.
 
elacsaplau said:
I think that SBarrett's advice is pure wrong.

In your circumstances, the first €23,800 of income of the spouse earning the lower income is subject to basic rate (20%) tax with the balance subject to the higher rate of 41%. In simple terms, if your taxable income is €30,000 - then the first €6,200 that you pay into a pension will qualify for 41% relief so long as this is within the allowable age related % relief, as set out below....

Age Amount which qualifies for tax relief
Under 30 years 15% of net relevant earnings
30 to 39 years 20%
40 to 49 years 25%
50 to 54 years: 30%
55 to 59 years 35%
60 and over 40%
Click to expand...

Thanks for correcting me. :eek:
 
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