Tax Relief on Voluntary Contributions

[markn]

I am currently paying an additional voluntary contribution to my pension. However, when I see my tax statement (PAYE worker)for last year I notice that the relief is given on the lower rate of tax whereas I pay tax at the higher rate of tax. Is this correct? Should all contributions be relieved at the higher rate of tax if it comes from income on which tax was paid at the higher rate?

 

[ClubMan]

However, when I see my tax statement (PAYE worker)for last year I notice that the relief is given on the lower rate of tax whereas I pay tax at the higher rate of tax.

If I recall correctly what they do on the statement of tax credits is give you a standard rated tax credit for the amount contributed and then also increase your standard rate band by the same amount - the net effect is that you pay no tax on the amount in question. Check your standard rate band details as well as the tax credit details. Post the details here if necessary for clarification.

By the way - if you are not making the AVCs via payroll (although I presume that you are if you are mentioning your tax credits statement) then make sure to claim PRSI relief separately. See the key posts in this forum.