Net Relevant Earnings

D

Deauville

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Hi,
I found a post on NRE from Dec. last but I'm afraid I still need clarification if anyone can help.
PAYE income and small €9,000 gross Non PAYE consultancy.
For the purpose of calculating the max allowable relief on pension contributions (within the € 115 k)
does 'Net Relevant Earnings' mean combined Gross PAYE earned income and Non PAYE earned income (declared 'nixer').
Many thanks in advance.
 
As far as I understand it:

Relevant earnings would be your PAYE income and self-employed income (Case I/II or Case III if foreign trade/profession).

Where you have two sources of pensionable earnings and one relates to an occupational pension scheme, Revenue are of the view that for tax relief purposes the pension contributions must be paid in the first instance to the employer occupational scheme.

I presume that your declared nixer falls into Case I or II (profits from a trade/profession), and is not Case IV (miscellaneous income) which would not be relevant earnings for pension purposes.

If you had €90,000 PAYE income and €9,000 self-employed income and were in the 50-54 age range with the 30% allowable contribution, you could contribute and avail of full tax relief for a contribution of €27,000 to your employer's DC scheme (if applicable) and €2,700 to a PRSA.

If you had €115,000 of PAYE income (and kept all the other parameters above constant) you could contribute €34,500 to your employer's scheme. You could contribute to a PRSA from your self-employed earnings but could not avail of tax relief in the same tax year as you have hit the €115k earnings cap. You could claim tax relief in a future year depending on the circumstances.
 
On the form 11, I'm trying to understand what do I put into the box, when claiming back the tax on additional avcs that we are going to pay, once Mercer tell us how.
The salary is more than 115k
 
Last edited:
Paul O Mahoney said:
On the form 11, I'm trying to understand what do I put into the box, when claiming back the tax on additional avcs that we are going to pay
Click to expand...

Section 241 "Pension Contribution Relief", page 14 of Form 11, for any AVC not deducted by employer.

Assuming a salary in excess of €115,000 and your wife's age in the 55-59 age bracket, pension contributions of €40,250 (35% of the €115k earnings cap) can be made for 2020 and can qualify for tax relief.

If your wife has made some pension contributions through payroll, just subtract these from €40,250 to determine your AVC amount.
 
AAAContributor said:
As far as I understand it:

Relevant earnings would be your PAYE income and self-employed income (Case I/II or Case III if foreign trade/profession).

Where you have two sources of pensionable earnings and one relates to an occupational pension scheme, Revenue are of the view that for tax relief purposes the pension contributions must be paid in the first instance to the employer occupational scheme.

I presume that your declared nixer falls into Case I or II (profits from a trade/profession), and is not Case IV (miscellaneous income) which would not be relevant earnings for pension purposes.

If you had €90,000 PAYE income and €9,000 self-employed income and were in the 50-54 age range with the 30% allowable contribution, you could contribute and avail of full tax relief for a contribution of €27,000 to your employer's DC scheme (if applicable) and €2,700 to a PRSA.

If you had €115,000 of PAYE income (and kept all the other parameters above constant) you could contribute €34,500 to your employer's scheme. You could contribute to a PRSA from your self-employed earnings but could not avail of tax relief in the same tax year as you have hit the €115k earnings cap. You could claim tax relief in a future year depending on the circumstances.
Click to expand...
So sorry. I've only noticed now that I didn't thank you for your reply. Belated thank you for your help.
 
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