Maxing out pension contributions

[suzie]

Hi,

Thinking of maxing out my pension contributions. While reviewing this online via Revenue's Form12 its presents the "Employment gross income" figure and I've to enter a value for "Net relevant earnings".

Looking at my P60 the "Employment gross income" figure includes the companies paid premium for health insurance (for BIK). I assume I need to subtract this to get to the "Net relevant earnings" figure?

Page definition for "Net relevant earnings" is:

• Net relevant earnings consist generally of employment income less deductions which would be made in computing total income for tax purposes. These deductions include losses and capital allowances . Earnings as a proprietary director or proprietary employee of an investment company are not relevant earnings.

Thanks
S

 

[Oisin19]

all emoluments are included in the calc. The figure on the P60 is the one you use.

 

[fayf]

Every item that is taxable is included. The P.60 is a great guide, but thats retrospective, which may be different to your current tax year compensation package. This is especially true, for years where you move to a higher % age related limit, such as age 49 - 25% changing to age 50 - 30%


Personally, i want to make my contributions as i earn, and not put in payments before the October deadline, i do a calc, well before the tax year commences, and adjust what i am putting in during the yeat, if there is a change such as a significant Salary increase, unexpected Bonus Payment, ot any other one off payments etc.

I take current Gross annual salary,
ADD
any additional Gross Payments such as : Expected Bonus Payments, Overtime, or other taxable payments. I also estimate Salary increases which are date static in my case, , so i can estimate this more or less.

ADD
ALL BIK items which typically includes Health Insurance BIK, Shares BIK- given to you by the Employer, Company Car BIK, Annual Company gifts etc

Inevitably, i tend to slightly overestimate the total amount, so i usually owe a few hundread at the end of the year, but i am fine with that.

Also, note that some of the better payroll systems,(The widely used “Megapay” being one example, allthough the feature can be turned off) check the employee age as part of the internal controls, i found this out by accident, and will not give you tax relief, on a portion of your contributions, if you are over the age related % limit - at a point in time. Eg, if you make your contributions from the start of the tax year, based on a 10k bonus, which is not paid out until November, it will disallow some of the tax relief, but this will rebalance over time, and by the end of the tax year, this will correct itself.