Tax on Bonus

Apologies for resurrecting an old thread.

I am due a bonus of 10k as of the end of this month. As I am on the higher rate of tax, I get 4.8k. If I pay this as a lump sump to my pension backdated for 2023, do I get 1920 as a tax relief?

What would be the most tax efficient way to reduce taxes? My employer wont pay directly to the pension as they deem this as salary sacrifice.
 
We are in the so called “squeezed middle” - it would have been nice to get just a bit more of what he earned.
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33.5k bonus is squeezed middle? That's more than a minimum wage salary, on top of his salary.
 
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Financequery said:
Apologies for resurrecting an old thread.

I am due a bonus of 10k as of the end of this month. As I am on the higher rate of tax, I get 4.8k. If I pay this as a lump sump to my pension backdated for 2023, do I get 1920 as a tax relief?
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If you pay the €10K lump sum into the pension and this doesn't bring you over your 2023 age related tax relief limit then you get full tax relief on it - i.e. €10K x 40%. You'll have to do this and submit the claim for relief by October 31st or November 14th if you use Revenue myAccount or are self-assessed.

Similar questions have cropped up in the past in case there's anything useful here:

 
How is it possible to pay the 10k bonus through payroll backdated for 2023. It is my understanding that It cant be done. To do this, I need to receive the bonus through normal payroll and then pay as an AVC.
 
Financequery said:
How is it possible to pay the 10k bonus through payroll backdated for 2023. It is my understanding that It cant be done. To do this, I need to receive the bonus through normal payroll and then pay as an AVC.
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I don't really understand your point/question. In the general case it is perfectly feasible to claim tax relief on a pension contribution against the previous year's income - e.g.:

Top up your pension savings and get up to 40% tax back | Employer Solutions at Irish Life

Additional Voluntary Contributions AVC company pension schemes
www.irishlifeemployersolutions.ie www.irishlifeemployersolutions.ie
Why do you think that this isn't possible in your case?
 
If backdating an avc, you pay the gross amount out of your bank account direct to your pension provider. Then you resubmit your tax return and get a 40 or 20% refund.
 
misemoi said:
If backdating an avc, you pay the gross amount out of your bank account direct to your pension provider. Then you resubmit your tax return and get a 40 or 20% refund.
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Thanks @misemoi, I didn't understand the question/issue but I think that you've addressed it. I omitted to clarify that such a pension top-up needs to be paid from net/after tax income and then the relief claimed manually retrospectively.
 
ClubMan said:
Thanks @misemoi, I didn't understand the question/issue but I think that you've addressed it. I omitted to clarify that such a pension top-up needs to be paid from net/after tax income and then the relief claimed manually retrospectively.
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It's probably not commonly done by people, I would guess most AVCs go through payroll. Though I did notice my pension provider proactively contacted clients this year to see if we wanted to do a retrospective AVC so maybe we will see it more often.
 
misemoi said:
It's probably not commonly done by people
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I would have thought that lump sum contributions from net income to claim tax relief against the previous year's income were common enough? I did several of them over the years myself and know others who did likewise.
 
ClubMan said:
I would have thought that lump sum contributions from net income to claim tax relief against the previous year's income were common enough? I did several of them over the years myself and know others who did likewise.
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The are, but they would have nothing to do with the company payroll. Employees would be making the payment their self and doing their own tax return.
 
ClubMan said:
I would have thought that lump sum contributions from net income to claim tax relief against the previous year's income were common enough? I did several of them over the years myself and know others who did likewise.
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Probably more common for personal pensions and EPPs
 
Am I imagining things as well or is the cut off for payment AND claiming the prior year relief the 31st Oct, not the extended online filer deadline in Nov? So someone would want to be organising it now. Seems like a bit of an anomaly as in theory I can get tax relief on medical expenses backdated 4 years but this has a strict cut off and file deadline? Maybe just not updated when they gave the extra 2 weeks for online filing.
 
misemoi said:
Am I imagining things as well or is the cut off for payment AND claiming the prior year relief the 31st Oct, not the extended online filer deadline in Nov?
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There was some confusion about this in the past and my experience was that October 31st was the deadline but the extended November (14th?) one seems to be available nowadays as far as I know. Either way, somebody who wants to do this should be getting their skates on at this stage.
misemoi said:
So someone would want to be organising it now.
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Yes.
misemoi said:
Seems like a bit of an anomaly as in theory I can get tax relief on medical expenses backdated 4 years but this has a strict cut off and file deadline?
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Such pension backdating was always limited to the previous year only.
 
misemoi said:
Am I imagining things as well or is the cut off for payment AND claiming the prior year relief the 31st Oct, not the extended online filer deadline in Nov? So someone would want to be organising it now. Seems like a bit of an anomaly as in theory I can get tax relief on medical expenses backdated 4 years but this has a strict cut off and file deadline? Maybe just not updated when they gave the extra 2 weeks for online filing.
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Note from my pension provider advises:

"Note the tax return deadline is 31 October for payment and paper returns to Revenue or 14 November for online ROS users. The completed form, ID requirements and payment by electronic funds transfer must be received by XXX at least 1 week prior to the Revenue deadline.

Please note, while the extended deadline for submitting the tax return via Revenue on-line is 14 November, Revenue may require you to include the tax certificate produced by XXX confirming your AVC payment. XXX cannot guarantee that this certificate will be available by 14 November for any AVC made after 31 October therefore you are strongly encouraged to submit your AVC and supporting documents before 31 October to avoid the risk of not meeting Revenue requirements."
 
Redzer said:
XXX cannot guarantee that this certificate will be available by 14 November for any AVC made after 31 October therefore you are strongly encouraged to submit your AVC and supporting documents before 31 October to avoid the risk of not meeting Revenue requirements."
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This bit is scaremongering.

There is no "Revenue requirement" to produce any cert to them by 14 November.
 
But can a lump sum bonus not be paid directly by an employer into an employees pension fund? This is presuming it didn't exist before and couldn't be salary sacrifice, as the salary isn't being reduced by that amount, its an additional payment.
 
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