Is it sensible (and legal) to fund a 2024 AVC via a short-term loan?

[Itchy]

the 35% tax relief limit applies, and I’ve already reached that limit through payroll contributions in 2025

Ah if that's the case it maybe no harm to utilise the 2024 tax relief.

Are these contributions through net pay arrangement or avc? If you don't have any 2025 tax relief yet, you can send in your documentation and they will give you half the tax relief back in the current year, but will need to wait until the end of the year to get the full 40% relief.

 

[ClubMan]

In case it's relevant, now or in coming years, the age 60+ 40% pension tax relief applies in the year in which you turn 60 - for the full year and not just pro-rata - e.g. even if your birthday is 31st December you can contribute 40% for the full year and get tax relief on it (the €115K limit on earnings also applies if relevant).

 

[conor_mc]

Yes, I joined my current employer mid-2024, so I had no pension contributions earlier in the year. This gives me unused headroom for an AVC contribution for the 2024 tax year.

Will this limit what you can contribute to your current employer’s scheme? You can’t take into account earnings earlier in 2024 at your prior employer. So if you earned 115k in 6 months at current employer then great.

Also, were you a contributing member of the scheme in 2024 - I’m not sure if that’s a relevant question when it comes to qualifying for tax relief?