Overpaid on AVCs - How to roll to next year?

[alanalanalan]

Hello! Looking for advice.

I made an error this year when contributing AVCs to an occupational pension scheme and as a result, contributed more than allowed for tax relief based on my age (34, making the threshold 20% of the max allowed €115,000, or €23,000) - over to the tune of nearly €20k (whoops).

Revenue have stated that if it was a private AVC, I could include a note in my annual returns asking for X amount to roll over into 2024, and then reduce/eliminate AVCs in 2024 so that I remain within threshold for tax relief overall. However, as it is an occupational pension scheme, the PAYE helpline could not advise on management due to the fact that tax relief is granted at source. My employer payroll department appears not to have any knowledge on how to manage this.

Does anyone have advice on what to do - presumably if I don't rectify, tax at my marginal rate would be due on the "overpayment" portion of the AVC above €23,000? I would rather avoid that - and cannot do anything about AVCs already contributed, I am quite a way off retirement yet.

Thanks!

 

[S class]

At the start of 2024 you can login to your myaccount. You can then do a statement of liabilities. This will calculate your tax based on your maximum AVC allowance. It will show an underpayment of tax. Usually this underpayment is collected by revenue over the next 5 years by decreasing your tax credits for each year.

 

[Corola]

You can carry forward the overpayment from 2023 and claim tax relief on it now, in 2024.

From MyAccount you can "Manage your Tax 2024" and add a tax credit for AVCs.

You will enter your expected annual income for 2024. Then in "Amount carried forward from a prior year from which relief has not been obtained" you will enter the excess from last year on which you didn't get relief (€20k you said).

You will not receive a refund to your bank account, but your tax credits and threshold will increase. So you will recover 1/12th of the tax relief in each of your monthly payslips over the course of 2024 (net pay increased by €666 per month).

You should then review your regular employee and AVC contributions this year to ensure you're not breaching the limit again. Given that you will have already claimed 20k of the 23k available in 2024, you can only claim another 3k this year. You may need to defer more until 2025.