PRSI Relief on AVC's

[Daddy]

2 PAYE employees:

A earns 65k
B earns 48k

Thinking of lobbing in 5k to each through salary deductions as an AVC.

Query is do we get full PRSI relief of 6% in each case or is the full 6% only given until the PRSI ceiling is hit and thereafter is it zero relief i.e 42% tax relief only once the annual ciling for paying PRSI is hit.

Thanks

 

[asdfg]

PRSI rates as follows
4% of income up to 46,600
2% on the balance

If your earning less the pension contribution are under the PRSI limit of 46,600 then you get the benefit of the 4 % reduction up to 46,600

In your example
B earns 48K - Pension Contribution 5K = 43K then the 4% benefit only applies to 3,600 (46,600-43,000) of the contributions plus the full 5K at 2%
A earns 65K - pension contribution 5K = 60K does not get the benefit of the 4% reduction but does get the benefit of 2%

In your case you should consider putting the lot against B's income provided this does not bring him/her into paying tax at 20% only.

Don't forget you can still claim tax relief against last years income.

 

[Daddy]

Thanks for that ASDFH.