Tax deductibility and standard rate cut off

C

cremeegg

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I have recently taken up PAYE employment and am considering contributing to an AVC.

My income from employment is circa e40k. This is less than my standard rate cut-off.

I also have rental income of circa e80

Based on my age I can get tax relief on a 35% of my income from employment as a contribution into AVC

What rate of tax relief will I get on these contributions to the AVC ?

Thanks for any insight
 
T McGibney said:
Until they clarify, their question is essentially unanswerable.
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Apologies for the confusion. Fat fingers it is. The rental income is e80,000 per annum.

So my marginal tax is at the higher rate. However much of my income cannot be used for pension purposes.

My pensionable income is less than (or only just above) the standard rate cut off. Does the rental income, although not pensionable itself allow me to get tax relief at the higher rate. That is my question.
 
Last edited:
The relief will be at your marginal rate of tax; the components of your income are only relevant for the purpose of calculating the net relevant earnings and age related limits.
 
torblednam said:
The relief will be at your marginal rate of tax; the components of your income are only relevant for the purpose of calculating the net relevant earnings and age related limits.
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Thanks Torblednam, I just got off the phone to Cornmarket who couldnt even engage with the question. All they would look at was the std rate cut off per my payslip, which is just an arbitrary figure allocating credits between PAYE income and rental income.

Do you have a reference for the above. Thanks
 
cremeegg said:
Do you have a reference for the above.
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Do you do your own taxes in relation to the rental income?

If you do your own taxes, just run a dummy Form 11 on ROS to test the hypothesis and you'll see what @torblednam said bear out. If you're paying an accountant, they'll confirm it for you.

A quicker way to also confirm the tax treatment of PAYE income, rental income, and a pension contribution is by entering your details here:

www.pwc.ie

Income tax calculator 2024

Use the interactive income tax calculator to estimate your tax position for the coming year in light of the measures announced in Budget 2024.
www.pwc.ie www.pwc.ie
 
@cremeegg
It's simply an arithmetic thing; the relief (which is provided for by section 787 TCA 1997), is by way of a deduction i.e. it reduces your income.

Income tax is (subject to a few very specific exceptions not relevant here) charged on your total / aggregate income, without regard to what components make up that total.
 
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