revenue do care that you changed employment as they won’t give tax relief. Also as a defferred member the pension company won’t accept the moneyYou make the AVC contribution to your AVC or DB scheme based on your 2021 gross wages from both companies. Your scheme is probably with Irish Life or aviva or Zurich or similar so you can log in yourself and make the pension contribution.
Then complete your 2021 tax return on revenue online with proof of payment of AVC and revenue will refund you the tax on the AVC contribution. All revenue look at is gross pay, your age, how much pension contributions you have paid already through payroll which have the tax relief applied and then they figure out the tax relief due and sent it to your bank account. It does not bother them that you changed employer.
It is a stupid rule that doesn't have any logic to it.
revenue do care that you changed employment as they won’t give tax relief.
Yes, an AVC can be made in relation to their current employment in Company 2. You are not allowed to contribute in relation to income earned in another company.It does seem to be unfair.
You'd know more than me but intuitively it would make sense that you could only contribute AVCs to the Company 2 Scheme in respect of Company 2 earnings. How could the trustees for the Company 2 Scheme factor in earnings from previous employments etc?
It is harsh, but once the OP left Company 1 they cannot make pension contributions in relation to their earning in Company 1. You cannot make pension contributions to a PRSA when they were in pensionable employment.What is the basis for disallowing tax relief on pension contributions to a PRSA before Oct 31 (or the ROS deadline) in connection with the earnings from Company 1? Is it the following section from the PRSA manual?
"Tax relief is allowed against “relevant earnings’’, which means earnings from a trade, profession, office or employment (section 787B Taxes Consolidation Act 1997 (TCA)). However, an individual who is a member of an approved scheme or a statutory scheme (other than a scheme which is limited to the following benefits – death in service gratuity, pension to surviving spouse, civil partner, children or dependants) may, in relation to her/his income from the office or employment, only claim relief in respect of additional voluntary contributions (AVCs) to a PRSA."
Assuming the OP makes the maximum AVC to the Company 2 scheme before the end of October based on the advice above on their Company 2 earnings only (i.e. (35% - 5%) x €24k), can they open a regular PRSA (as this is available regardless of job or employment status) and make a contribution of 30% of their 2021 earnings from the Company 1 employment (i.e., €14,400) before Oct 31 and claim tax relief via their tax return or MyAccount?
The income from the Company 1 employment was earned income and presumably relevant earnings for tax relief for a contribution to a PRSA.
I know they lose the flexibility of the AVC for funding lump sums (other than the 25% they'd get on the stand alone PRSA) and early retirement which they'd receive on AVCs to a main scheme or PRSA AVC.
Or is it only the self-employed and employees with AVCs to a main scheme (if that option exists) or PRSA AVC from their current employment that have this flexibility to back date a contribution?
As far as my understanding goes, a self-employed person could open a PRSA today and make a contribution before Oct 31 and claim relief on 2021 relevant earnings. They could have worked as a painter for six months and a plumber for six months and presumably pension contributions from those earnings qualify for tax relief if paid before Oct 31 and relief claimed before Oct 31?
It would seem harsh if the tax relief for the employee with the work pattern above would be disadvantaged and lose out on tax relief for 2021.
Pension contributions cannot be made in respect of company 1.You make the AVC contribution to your AVC or DB scheme based on your 2021 gross wages from both companies. Your scheme is probably with Irish Life or aviva or Zurich or similar so you can log in yourself and make the pension contribution.
Then complete your 2021 tax return on revenue online with proof of payment of AVC and revenue will refund you the tax on the AVC contribution. All revenue look at is gross pay, your age, how much pension contributions you have paid already through payroll which have the tax relief applied and then they figure out the tax relief due and sent it to your bank account. It does not bother them that you changed employer.
You cannot make pension contributions to a PRSA when they were in pensionable employment.
Apologies I got it so wrong. It does seem illogical that there is no straightforward way to make an AVC payment.
Is it revenue that does not allow it or the employer AVC scheme?
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