Tax credits when only income is rental and pension

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patfish

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I stopped working PAYE a few years ago and when I was submitting my Form 11 for rental income and a small pension bond I cashed in 10 years ago, I only got about €2100 tax credits for the year (2024). I seem to remember it was nearer 4k when I was in PAYE employment. My credits are for personal credit and a low employee credit. I seemed to remember there was 2 credits that were around the 1800 mark before but I'm thinking I have lost one given that I have no 'earned income' as such. Am I missing a credit somewhere ?
 
You don't get Paye tax credits (earned income tax credits) when your only income is unearned. This is a loss of 2k worth of credits.

You will regain your Paye credits when you drawdown a pension or an ARF.
 
The thread title seems a bit misleading. It suggests that you have rental income and pension income whereas in fact you only seem to have rental income? If you were drawing income from a pension (annuity, ARF, PRSA, defined benefit scheme etc.) I believe that it would be treated as earned income and you'd get the corresponding credits. Certainly that's the case with my > €5K p.a. taken from my PRSA.
 
Sorry for the confusion, the small pension is an annuity I got when I cashed in a bond at 50 to get the 25% lump sum. Should this entitle me to the PAYE tax credit ? I may have picked the wrong one in the drop down of the pension choices you're given on the Form 11 (ARF rather than Annuity). I am 63 and I believe I do have an option to draw down my employment pension early. Should I do so if only to get the extra credit ?
 
patfish said:
the small pension is an annuity I got when I cashed in a bond at 50 to get the 25% lump sum. Should this entitle me to the PAYE tax credit ?
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I think so but I'm not sure if the €5K minimum for PRSI purposes also applies to income tax/credits? What is your annual income from the annuity and from the rental?

FWIW I have c. €17K p.a. PRSA early retirement (late 50s) income plus c. €13K p.a. non rental passive income plus my son in third level living with me and I get these credits and SRCOP for 2025:
  • Single person credit: €2K
  • Employee PAYE credit: €2K
  • Single person Child Carer (SPCC) credit: €1.9K
  • Total: €5.9K
  • SRCOP: €48K (€44K single person SRCOP + €4K increment because I qualify for the SPCC).

Tax rates, bands and reliefs

This page shows the tables that show the various tax band and rates together with tax reliefs for the current year and previous four years
www.revenue.ie
 
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patfish said:
the small pension is an annuity I got when I cashed in a bond at 50 to get the 25% lump sum. Should this entitle me to the PAYE tax credit ?
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Yes the income from the annuity will allow you to use some or all your PAYE credits.

You can submit an amended form 11 with the annuity employment corrected.

Drawing down your employment pension early to gain your full PAYE credits is probably a good idea provided it doesn't push you into the 40% tax band.

Are you relying on class S contributions to add to your existing Prsi record ?

When you include the annuity on your tax return your class S from rental will be converted to class K as a result of the class M from the annuity.
 
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Actually, the annuity would be pre loaded into your form 11 because it would be submitted to revenue by the provider. So this is possibly what the extra 100 euro in tax credits relates to.

Have you been receiving class K from your rental income ?
If you have your annuity is correctly submitted as a pension.
 
patfish said:
the small pension is an annuity I got when I cashed in a bond at 50 to get the 25% lump sum. Should this entitle me to the PAYE tax credit ?
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Yes, but it depends on how much annuity income you received in 2024.

If the annuity income is €9,375+ in 2024, the maximum employee tax credit for 2024 of €1,875 is available.

If the annuity income is less than €9,375, the employee tax credit will be capped at 20% of the income.

patfish said:
when I was submitting my Form 11 for rental income and a small pension bond I cashed in 10 years ago, I only got about €2100 tax credits for the year (2024).
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It's probably the case that for 2024 you got the following tax credits:

- Personal tax credit = €1,875
- Employee tax credit = €225 (based on annuity income of ~€1,125)

More details from Revenue.ie
 
patfish said:
the small pension is an annuity I got when I cashed in a bond at 50 to get the 25% lump sum.
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Are you certain the source of the income is from an annuity?

If you took 25% as a lump sum, most go with an ARF for the balance but maybe you did purchase an annuity from a Life Co.

What has me doubting this is a post you wrote in January 2024 referring to your income sources as:
patfish said:
Type of employment: Rental Income and ARF which pays roughly 1.5k annually.
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ClubMan said:
does it actually matter whether the income is from an annuity or ARF when it comes to tax credits, PRSI
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I think it might. More could be withdrawn from the ARF to get Class S contributions (if required) but there's someone better qualified on here to determine that.
 
AAAContributor said:
More could be withdrawn from the ARF to get Class S contributions (if required)
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Ah, good point. The annuity income would be fixed (other than indexation if applicable) but the income from an ARF or PRSA could be varied if needed. Never thought of that.
 
AAAContributor said:
If the annuity income is less than €9,375, the employee tax credit will be capped at 20% of the income.
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My mistake in the past post as it is an annuity. This looks likely to be the case here as my annuity is only about 1.5k gross p.a.
S class said:
Are you relying on class S contributions to add to your existing Prsi record ?
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I'm signing for class A credits. It appears that probably the most efficient way of tax for me is to get a part-time job and earn between 5k and 10k.
Thanks for the help.
 
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