How to claim tax back on additional pension AVC?

O

OrpSpring

Registered User
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Hi, During the year I paid an extra 4000 Euro into my employers pension as an additional AVC. The pension company subsequently sent me a letter to confirm that. I have since left that employer. I am trying to use that letter from the pension company to claim back 40% of the AVC.
When I go into ROS, I try to add an additional credit for the AVC and it asks loads of questions around estimated gross and net income. It then tells me that my tax credit will be 800 (20%). I am not sure what I am doing wrong. Any advice?
 
Are your earnings high enough to allow for 40% tax relief on all the AVCs?
Have you exceeded your yearly maximum age related allowance for tax free pension contributions?
Those questions on ROS can be very confusing you might have to correct what to put in each box to get the proper tax relief.
 
Hi OrpSpring,

I ran into a similar issue doing the same thing a few months ago.

I was looking for tax relief on 3,000 I had put into an AVC and I thought they were only giving me 20% tax relief because my tax credits were only increased by 600.

A few weeks later I realised that my Standard Rate Cut-off Point (SRCP) had also been increased.

I think that between the two changes I got the 40% relief. It's definitely not intuitive and it would have been much easier to understand if my tax credits had just been increased by 1,200 but it worked out fine.

I don't have my tax credit certificate handy, but I'll take a look for it and confirm.
 
The reason the do this is revenue dont know what rate of tax you paid or will pay, so if they gave you 1200 tax credit this would be off your tax, even if you only paid at 20%.
 
I am pretty sure I have not exceeded my yearly maximum age related allowance for tax free pension contributions.
Should I wait until January to claim this tax credit - at least then they will know my gross and net salary amounts.
 
OrpSpring said:
I am pretty sure I have not exceeded my yearly maximum age related allowance for tax free pension contributions.
Should I wait until January to claim this tax credit - at least then they will know my gross and net salary amounts.
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If you're assuming Revenue will return the full 40%, safe in the knowledge you've paid sufficient tax, you'll be disappointed.

At least that was the experience my wife had. She made a 2020 contribution this year before the cut-off date. The change to the tax credit was 20% of the contribution, along with an update to the SRCP for 2021. To add to the confusion, I actually got the increase in the SRCP, which I assume is because we're jointly assessed and I'm the main tax payer (?)

As this was the first time she had made an additional contribution, we were both also confused as to why the 40% was processed in this way (thanks cloughy for explaining the rationale). At least the refund and SRCP change were made promptly.
 
I don't understand why you seem to be implying that anybody in this situation might be disappointed. Your wife got full 40% tax relief on her contributions as far as I can see.
 
ClubMan said:
I don't understand why you seem to be implying that anybody in this situation might be disappointed. Your wife got full 40% tax relief on her contributions as far as I can see.
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You've misunderstood me, what I was basically saying to the previous poster was don't expect Revenue to immediately send them a 40% refund, even if they know what they earned, they'll still follow the same approach as if they didn't know (per cloughy's explanation, you get the 40% split between a tax credit & an increase in your SRCP).
 
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Not quite sure why you are saying - for the last couple of years I always got an almost instant refund of 40%. My wife was waiting for about 3 weeks last October but they were just busy (she submitted on last day, I usually do so a few weeks earlier).)
 
Interesting, not my wife's experience, nor aamusername's it sounds like. Would have far preferred the straight refund.
 
I made my claim during the year in which I made the AVC contributions, so the refunds were made via my tax credit cert and my pay was adjusted. That's how I'd expect it to work in such circumstances.

If I had made the claim for contributions in the previous tax year I'd expect I'd have gotten the 40% back as a straight refund.

It is great not to have to wait until the end of the tax year though as it really helps with cash flow to get the money back in the same year the contributions are made. It's just a bit harder to follow the calculations but, to me at least, it's definitely worth it to get the tax back so much sooner.
 
Oh I see, makes sense in this case. I always make AVC's outside of payroll a few weeks before the Oct 31st deadline for the previous year. So far, this never had any impact on the tax credits.
 
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