AVC Queries

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TRS30

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OH's salary is €55K however she takes one parenteral leave day a week so gross salary circa €44K. Factoring in credits and that she is already pay 6% pension for company matching, would I be right in saying that any AVC's she would pay would only get 20% tax relief?

My own pensionable salary is circa €68K, if i was to make 10% AVC (already pay 6% to match company contributions), would this cost me around €280 monthly in nett salary?
 
Your joint total incomes are 112000 euro.
Your joint total 20% tax band is 84000 euro.
Jointly you have earnings of 28000 euro taxable @ 40%.
Any pension contributions made by either of you up to this amount (and within your age related yearly allowance) will get you tax relief at 40% (your marginal rate).

Depending on how you allocate your tax credits and bands between you, the tax relief for your wife might appear as 20% from her wages.

At the end of each tax year when you request a statement of liabilities the correct 40% tax relief will be calculated.
 
Does this mean, if your partner who's income exceeds €115k and they claim their full age related relief, can their remaining income taxable at 40‰ be attributed to the other partners pension Avc? I think I've misunderstood you, but just checking

Thanks S
 
For a married couple. The maximum 20% tax band is up to 84000 euro. (42000 euro each)
Up to 9000 euro of the tax band can be transferred from one person to the other.
So one person could have a band of 51000 and the other could have a band of 33000.

In the example above the wife could have the 33000 band.
This means she has 44000 - 33000 = 11000 earnings taxed at 40%.
She has scope to get 40% tax relief on pension contributions of 11000 euro.

The husband would have 68000 - 51000 = 17000 earnings taxed at 40%.
He has scope to get 40% tax relief on pension contributions of 17000 euro.
 
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S class said:
Your joint total incomes are 112000 euro.
Your joint total 20% tax band is 84000 euro.
Jointly you have earnings of 28000 euro taxable @ 40%.
Any pension contributions made by either of you up to this amount (and within your age related yearly allowance) will get you tax relief at 40% (your marginal rate).

Depending on how you allocate your tax credits and bands between you, the tax relief for your wife might appear as 20% from her wages.

At the end of each tax year when you request a statement of liabilities the correct 40% tax relief will be calculated.
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Thanks.

So we are currently contributing a combined 6.7K. So we could up that by another 20K (both in 40s so 25% max) and would get 40% relief regardless of which salary it came from?

I have rental income and OH get's overtime however don't believe either of those impact on pension contributions.
 
S class said:
Your wife could get maximum 11000 euro at 40%. As in post #4.
Click to expand...

Ah ok, sorry this line, from your first post, threw me as thought it meant 40% would be retrospectively applied at year end:

'At the end of each tax year when you request a statement of liabilities the correct 40% tax relief will be calculated.'
 
The correct tax rate will be automatically calculated when you request your statement of liabilities. If your wife received tax relief from her wages at 20 % on an AVC up to 11000 euro, this would be corrected in the statement of liabilities. There is no need to adjust both your tax bands unless you both wish to have the correct tax reduction at source from each others wages.

My first post was a quick reply and the #4 post is more accurate.
 
TRS30 said:
I have rental income and OH get's overtime however don't believe either of those impact on pension contributions.
Click to expand...
You can't make AVCs based on your rental income. However the rental income means that you are paying 40% tax on a larger amount of income per year.
This could allow you to make larger AVCs relieved at 40%.
This would still be limited to 25% of your pensionable employment income.

Your wife could include her overtime earnings when calculating her maximum 25% allowable tax relieved AVCs.
 
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S class said:
You can't make AVCs based on your rental income. However the rental income means that you are paying 40% tax on a larger amount of income per year.
This could allow you to make larger AVCs relieved at 40%.
This would still be limited to 25% of your pensionable employment income.

Your wife could include her overtime earnings when calculating her maximum 25% allowable tax relieved AVCs.
Click to expand...
Thanks again.

Am starting to get figures together as want to change finances around post summer (holiday expenses etc) so this has been very helpful.

Will post again when have all figures worked out, to make sure my thinking is correct.
 
Apologies for hijacking the thread but is it possible to set up a new PRSA and make a contribution for 2023 before October? Or does the fund need to be created in 2023 also?
 
Bearsandbulls said:
Apologies for hijacking the thread but is it possible to set up a new PRSA and make a contribution for 2023 before October? Or does the fund need to be created in 2023 also?
Click to expand...

One point to be clear about is that in order to qualify for this backdating you must (a) make the contribution before October 31st AND (b) elect to have the contribution included in the 2023 tax year (i.e. claim the tax relief on it) by October 31st. I've seen instances where someone made the pension contribution before the deadline but didn't submit the claim to Revenue until after and the tax relief was not backdated; they got it in the current tax year instead.

Deadline for 2023 tax year is extended to Thursday 14th November 2024 if you're dealing with Revenue online.

Regards,

Liam
www.FergA.com
 
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