Revenue method of tax relief for SCPS deducted from tax free lump sum.
Tax Relief for Lump Sum Contributions to Spouses and Children's Pension Scheme
Deducted from Pension Gratuity
As the lump sum contribution to the SCPS is deducted from your pension gratuity, tax
relief will be given by apportioning the amount deducted over the 5 tax years ending
on the previous 31 December, up to a maximum of the relevant age/earnings limit for
each year.
If any part of the lump sum deducted remains unrelieved at that stage, further relief may
be available.
In practice, the Revenue normally grant the relief as follows:
1. The lump sum contribution is to be allowed first by apportioning it evenly over, and
treating it as paid in, the last 5 complete years ending on 31 December immediately
prior to leaving the company.
2. Where, by reason of the age-related or earnings limits, part of the lump sum
contribution cannot be allowed in any year in accordance with Paragraph 1, the part
not so allowed is to be relieved -
(i) in the other years (if any) of the 5 year period in which the relevant
limit has not been reached, beginning with the tax year closest to the date
of departure. Relief is to be given up to the balance of the relevant limit in
each year,
(ii) secondly, any balance not allowed at (i) is to be allowed in the preceding
tax years commencing with the year preceding the 5 year period, but
subject to the statutory 10 year time limit i.e. in year 6 up to the balance of
the relevant limit, then in year 7 and so on until the contribution is fully
relieved or year 10 is reached,
(iii) finally, in the year of departure up to the balance of the relevant limit for
that year.
Any amount of the contribution remaining is not available for relief.