Tax Credit for Pension Contributions

[Unregistered]

My husband pays a total of €1485 each year towards a standalone pension not through his employeer.We get a tax credit for this amount each year but it is only allowable at 20%. He earns €800 each week with his weekly cut off point of €508. With this he is paying tax at 42% for a portion of his income, should this tax credit not be allowable at 42% so ?

 

[ClubMan]

Check the statement of tax credits in case his standard rate band was increased by Eur1485 while also being given a standard rated tax credit of Eur297 (Eur1485 x 20%) thus cancelling each other out and making his pension contrbutions tax free? Note also that PRSI relief must be claimed separately. There's a link about this in the PRSAs and Pensions forum key posts topic but the links are all screwed up at the moment so there's no point in me posting it right now.

 

[Unregistered]

Have checked tax cert and standard rate band has been increased by 1485 as you've suggested, is this correct ?

I've already applied for a refund of PRSI on pension amount for the last 2 years have used the info in AAM

 

[ClubMan]

Have checked tax cert and standard rate band has been increased by 1485 as you've suggested, is this correct ?

If the standard rate band is increased by 1485 and a standard rate tax credit of 297 (1485 x 20%) is also granted then both cancel each other out and no tax is ultiamtely paid on the pension contribution of 1485.

I've already applied for a refund of PRSI on pension amount for the last 2 years have used the info in AAM

You can claim PRSI back for 2004, 2003 and also 2002 if the contribution was made in 2003 before October 31st of that year and set against income earned in 2002 (this last item is a bit odd and something that I only discovered today).