AVC just before retirement

[Deauville]

Hi,

I'm not Public Service.
I retire in May this year from DC scheme.

I have scope to do a small lump sum AVC 4k which would be applied to a small amount of 40% PAYE for last year 2023 and get a 1,600 rebate .

However, if I also make a last minute AVC (based on an estimated whole year 2024 income portion subject to 40% ), get a cert from the administrator and submit it when doing the 2024 return next year.

Can I still get the tax relief on AVC (rebate) based on the earnings at 40% in 2024 even though I have yet to receive much of this income which will be post retirement.

Basically getting relief set against income tax from whole year even though retired after only four months.

I only want to apply AVC relief to 40% rate.

Any insights welcome.

 

[cally1990]

Yes

The payment of 4k in respect of 2023 will be applied for PAYE relief against 2023 income , if your due 40% then yes

You can do the same in 2025 for 2024 (or make it in 2024 for 2024) subject to age related limits and earnings capped at 115k

 

[Redzer]

The AVC amount that you can Tax Relief on is dictated by your age at the end of the year in question. Its not restricted to the amount that you pay tax on at 40%. Limits here - https://www.revenue.ie/en/jobs-and-pensions/pension/relief/tax-relief-limits.aspx

If you were aged 60 or over on 31/12/23 then you can claim tax relief on total pension contributions of 40% of your gross income ( to max of €115k p.a.). I know you're only proposing a €4k AVC but the more you can contribute, the more you can get tax back. E.g. If you earned €50k last year then you could get tax relief on your pension contributions up to €20k. If you paid €12k tax last year then you'd be due a refund of approx. €6k.

If you're activating an ARF in May then you'll get a lump sum back then also, so you should factor that into your calculations if you can manage to get access to the €20k or other large AVC amount.

Any AVC must be made while still in employment.