Advice sought on tax relief on pension for self-employed

[olivia]

I am self-employed since late 2011. If I were to invest in a Self-Administered Pension Fund what tax relief would I be entitled to? Self-Employed turnover for 2011 was 18K and profit approx. 12k. If I don't invest in a pension before 31 October would I be foregoing tax relief or can I claim it in the 2012 return? How much does Revenue allow tax relief on? I presume the relief is a percentage of profit (not turnover)? How much tax relief would I be entitled to (I am 52)? Can anyone advise me on what my best course of action? My main concern at the moment is having to do something by next Wednesday.

 

[LDFerguson]

If I were to invest in a Self-Administered Pension Fund what tax relief would I be entitled to?

I am assuming that you are a sole trader as distinct from a company director. If you are a company director, my answers below are not relevant.

Why self-administered?

You're entitled to claim tax relief on your contribution at your highest rate. So if you paid tax at 41% then you claim 41% tax relief on the contribution.

Self-Employed turnover for 2011 was 18K and profit approx. 12k.

Did you have income from other sources from earlier in the year? This will determine what rate of tax you'll be paying for 2011.

If I don't invest in a pension before 31 October would I be foregoing tax relief or can I claim it in the 2012 return?

If you don't make a pension contribution before the deadline you cannot claim it against 2011 income. The deadline is extended by a couple of weeks if you are filing and paying online using Revenue's ROS service.

How much does Revenue allow tax relief on?

At age 52, 30% of your Net Relevant Earnings, i.e. earnings less allowable expenses.

Liam D. Ferguson