Allowance on Pension

I received my monthly statement from my pension provider (annuity); for the first time in 2 year I had tax deducted of €169 from my montly amount of €413. I am 67 and also receiving contributory state pension. I always thought that the state pension was exempt from tax and that the tax allowance was totalled in excess of the state pension. I was told by the person on the phone in the tax office that it was the total of all earnings that counted.
However way they calculated it I am still below the tax limit and will receive a tax credit.
I would like to know how this works so I can check it out myself. I would have thought the tax credit would have carried over from last year

The State Pension is taxable.


Tax credits are as follows:

http://www.revenue.ie/en/tax/it/leaflets/it1.html#section1

Single person = 1650
PAYE tax credit = 1650
Age tax credit, if over 65 = 245

Total of basic tax credits = 3545

There are other tax credits, see the list above.

This means you can earn at least 17,725 tax-free.

Also, if over 65, earnings under 18k are tax-exempt.


You seem to earn 413*12 = 4956 plus the State pension of 230*52, means 16916 in total.

You tax liability should be zero.

Thanks Protocol. I see that I am also exempt from the Levy, but I am paying USC, is this correct?

What levy?

The income and health levies were merged into the USC for 2011.

All we have now are tax, PRSI and the USC.

Details about the USC:

http://www.revenue.ie/en/tax/usc/universal-social-charge-faqs.pdf


Universal Social Charge (USC)

The Universal Social Charge is a tax payable on gross income from all sources, including notional pay, after any relief for certain capital allowances, but before pension contributions.


The rates of Universal Social Charge are:

• 2% on the first €10,036
• 4% on the next €5,980
• 7% on the balance.

However, these standard rates are modified in certain circumstances. In the case of individuals aged 70 or over, and individuals who hold full medical cards, the 4% rate applies to all income over €10,036.

There is a surcharge of 3% on individuals who have income from self-employment that exceeds €100,000 in a year, regardless of age. Thus, where such individuals are under 70 years and do not hold a full medical card, a rate of 10% applies to such income and where such individuals are aged over 70 years or hold a full medical card, a rate of 7% applies.


Exempt Categories:

• Where an individual's total income for a year does not exceed €4,004
• All Dept of Social Protection payments
• Income already subjected to DIRT.

• Universal Social Charge FAQs (PDF, 419KB)
• Universal Social Charge (USC) - Employer Factsheet (PDF, 47KB)

(Adobe Acrobat Reader PDF)



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I was looking up documentaion on the Revenue site, it would appear that I was exempt from the levy last year, I am exempt from PRSI and Tax this year but I am paying 2% USC on my private pension, so I assume that the state pension is included in the USC.

Protocol said:

Universal Social Charge (USC)





Exempt Categories:

• All Dept of Social Protection payments

Click to expand...

Let me be very clear: the State Pension, paid by the Dept of Social Welfare / Social Protection, is exempt from the USC.

Are you sure about this. i was reading further down on the frequently asked questions USC revenue site and it seems to have a list of social welfare payments - does not include contributory state pension and only seems to include dependant part of a non-contributory state pension.

Universal Social Charge (USC)

The Universal Social Charge is a tax payable on gross income, including notional pay, after any relief for certain capital allowances, but before pension contributions.


The rates of Universal Social Charge are:

• 2% on the first €10,036
• 4% on the next €5,980
• 7% on the balance.

However, these standard rates are modified in certain circumstances. In the case of individuals aged 70 or over, and individuals who hold full medical cards, the 4% rate applies to all income over €10,036.
There is a surcharge of 3% on individuals who have income from self-employment that exceeds €100,000 in a year, regardless of age. Thus, where such individuals are under 70 years and do not hold a full medical card, a rate of 10% applies to such income and where such individuals are aged over 70 years or hold a full medical card, a rate of 7% applies.


Exempt Categories:

• Where an individual's total income for a year does not exceed €4,004
• All Dept of Social Protection payments
• Income already subjected to DIRT.

Apologies if i am harping on but its the appendix A at the bottom of the FAQ that had me questioning this.

Appendix A seems to list "social -welfare - like" payments, not actual social welfare payments?

Could that be the cause of your confusion?