AVC & Tax relief query

[DublinHead54]

Hi,

I am trying to calculate how much AVCs I can make. I am in the 30-39 bucket with 20% of 115,000, so a max of 23k relief is allowed. Is this 23k pre or post relief? i.e. If I make an AVC contribution of 23k it will cost me 13,800 (23k*0.6), but if I make an AVC of 25k, the additional 2k will get no relief?

 

[Conan]

So in any year you can currently contribute a total of 20% of €115,000 and offset such against your salary before Income Tax is levied. So if you are a 40% tax payer, you effectively get tax relief on such contributions, thus reducing the net cost to €13,800. However this limit is inclusive of any contributions you are required to make to the main scheme. So if for example you are required to contribute 5% of salary to the main scheme, then your AVC is limited to a further 15% (for tax relief).
If you contribute more than 20% in total in the current year, then any excess can be carried forward in future years.

 

[Slippers]

On the payforward option -

Is there an upper limit on the euro amount you can pay forward, and is there an upper limit on the number of years you can pay forward?

And when it comes to claiming the tax back, must you immediately claim in the year that follows your payment, and then every year after that until you have caught up with your pay forward amount?

 

[Andynb]

I think i read somewhere that if for instance you pay 5% and your employer pays say 10% that is classed as you paying 15%. Not sure if thats correct or not, would be nice if anyone knows?

 

[ClubMan]

I think i read somewhere that if for instance you pay 5% and your employer pays say 10% that is classed as you paying 15%. Not sure if thats correct or not, would be nice if anyone knows?

That's how it's done if it's a PRSA.
For an occupational scheme the employer and employee contributions are not aggregated in this way.

Tax relief on employer contributions

Employers get tax relief on any contributions they make to a pension arrangement...

www.pensionsauthority.ie