I will hit the tax-deductible pension contribution limit in July. What options do I have?

J

JackN

Registered User
Messages
23
Hi,

I am having a good year regarding sales commissions.

I have just gone 60, so I have been putting 40% of every payroll run into my pension. I understand that the maximum for tax-deductible pension contributions I can make is 40% of €120K.

As I will hit that threshold in July, I wonder if there are other options I can explore to minimize the tax I pay on my income for the rest of the year.

I know this is a good problem to have. But I would appreciate any practical advice on my options.

Regards,
John.
 
JackN said:
Hi,

I am having a good year regarding sales commissions.

I have just gone 60, so I have been putting 40% of every payroll run into my pension. I understand that the maximum for tax-deductible pension contributions I can make is 40% of €120K.

As I will hit that threshold in July, I wonder if there are other options I can explore to minimize the tax I pay on my income for the rest of the year.

I know this is a good problem to have. But I would appreciate any practical advice on my options.

Regards,
John.
Click to expand...

If you didn't max out last year, you can still make AVC's for last tax year
 
You can also continue to make the contributions and then claim the tax relief in future years.
 
You can invest in EIIS Schemes (Funds) and you claim tax relief (40%) instantly in that year over and above your Pension contributions (entitlements). The minimum investment is Euro 20K though.
 
Swayam_989 said:
You can invest in EIIS Schemes (Funds) and you claim tax relief (40%) instantly in that year over and above your Pension contributions (entitlements). The minimum investment is Euro 20K though.
Click to expand...

Minimum investment to the Davy/BDO EIIS fund is 5k. Bear in mind these are far from risk free- it’s a 5 year investment in Irish SME’s.
 
Okay. Thanks for that, the Goodbody fund had 20K. I know they are not risk free, as they invest in SME’s however if you would see the past record, they structure it more like a Mezzanine debt and Give approx 1-2 % return on your capital. These days its more like a medium to save tax than to earn return. Nonethelss the capital is at risk, that is true.
 
Agreed it’s more of a tax saving venture than a true return-bearing investment. With the Davy fund, there have been a couple of communications to clients recently to say some client companies have gone bust due to
covid19, as well as Revenue refusing to give qualifying status to some investee companies. EIIS is a great scheme in theory and a fund of SMEs as offered by BDO/Davy and Goodbody (are there other promoters?) is better from a risk perspective than lumping it all into one company/investment. There are risks though. Also, it’s the only non-pension scheme I’m aware of that offers tax relief- the old S481 Film Finance was great while it lasted!
 
You must log in or register to reply here.
Back
Top