AVC contribution from non-PAYE income

[abc_xyz]

In a scenario where a person has PAYE income with a company pension. AVCs are paid to the maximum allowed age related limit. There is also some non-PAYE income, earned if it makes a difference. Can the person make AVC payments into the company pension scheme and claim tax back against the non-PAYE income?

eg. for a 38 year old
100k salary/PAYE income
5k pension + 15k AVC (so total 20k into pension) from PAYE income
10k non-PAYE additional income

Can another 2k be paid into the company pension and tax relief be claimed on it?

 

[AAAContributor]

Can another 2k be paid into the company pension and tax relief be claimed on it?

As far as my understanding goes (not a qualified financial adviser), based on the facts above:

The age-related % contribution limit for a 38-yr old is 20%.

The maximum contribution you can make to your company scheme is 20% of your €100,000 salary, so €20,000.

You are presently contributing 5% of your salary as payroll deductions, which is €5,000.

That leaves you room to contribute €15,000 as an AVC to your company scheme.

Assuming that the non-PAYE income of €10,000 is presumably Schedule D Case I/II (and not rental income etc.), you can contribute 20% of the €10,000 income (€2k), to a personal pension/PRSA, and avail of tax relief. You can't pay in an extra €2k into the company scheme and get tax relief as far as I know.

Example 3 on Page 11 of this link seems similar to your situation and is the back up for the above statements:

[broken link removed]

 

[Steven Barrett]

In a scenario where a person has PAYE income with a company pension. AVCs are paid to the maximum allowed age related limit. There is also some non-PAYE income, earned if it makes a difference. Can the person make AVC payments into the company pension scheme and claim tax back against the non-PAYE income?

eg. for a 38 year old
100k salary/PAYE income
5k pension + 15k AVC (so total 20k into pension) from PAYE income
10k non-PAYE additional income

Can another 2k be paid into the company pension and tax relief be claimed on it?

No.

This is something that the Revenue had to clarify a number of years ago referring to hospital consultants and their private practice income.

You are in receipt of two sources of income, one PAYE and the other under Schedule D Case I & II ie self employed. You are a member of a pension scheme for your PAYE income. You must max out your pension contributions to your company pension first. After that, contributions from your self employed income can be paid into a personal pension or a PRSA.

As this self employed income is not related to your PAYE employment, you can never make contributions from this income to your company plan.

If your non PAYE income is rental income or dividends, this is unearned income and not pensionable.


Steven
www.bluewaterfp.ie