Topping up pension

F

finbarrcork

Guest
Hi,

I am 27 and have been contributing to my pension sice starting work 4 years ago, I have heard recently about the tax benifits about topping up my 5% before the end of october, Could anyone elaborate on this? what are the incentives and details and so on.

Cheers
Fin.
 
If you have a personal pension or PRSA and did not contribute the max amount (e.g. 15% for under 30 year old) last year then you can avail of the "unused" tax relief before October 31st of the current year. For example, if you contributed 9% of your income in 2003 then you could make a lump sum contribution of 6% of your 2003 income before October 31st 2004 and claim full tax (and PRSI although Welfare are still not dealing with this as far as I know :\ ) relief. Unfortunately you can only backdate contributions in this way to the previous tax year. You can't claim unused relief from earlier years. Does this make sense to you?
 
Sorry - I specifically mentioned personal/PRSA pensions but the same conditions may apply to occupational schemes. I can't remember!
 
Yes if the questioner is in an Occupational Scheme with the facility to make Additional Voluntary Contributions (AVCs) he can pay a lump sum AVC before 31st October 2004 in respect of 2003 tax year and claim the refund.
 
Thanks guys, I understand now. Now to get the lump sum....!
 
It’s important to be aware that you have to both pay the contribution and file your tax return electing to backdate to the previous year, in advance of the 31st October deadline.

Revenue will not permit tax relief to be granted in the preceding tax year (even though the pension premium has been paid before 31/10/2004), if you have not elected to claim the tax relief in the preceding tax year in your final tax return or if you have not filed the tax return on or before the return filing date, (i.e. 31/10/2004 for the tax year 1/1/2003 to 31/12/2003).

If your return is being made through the Revenue On-line Service (ROS) you have an extra 3 weeks to the 18th November to pay a backdated contribution and to file your return.
 
> It’s important to be aware that you have to both pay the contribution and file your tax return electing to backdate to the previous year, in advance of the 31st October deadline.

Are you referring specifically to self employed self assessment here? As a PAYE worker I have never had any problems making pension top-ups before October 31st and then claiming tax relief in respect of the previous year's unused "allowances" AFTERWARDS - sometimes as late as the following year having received my P60 for the year in which the top-up was made.
 
The filing requirement actually applies to non self-employed as well. The facility to backdate contributions to a previous tax year was only extended to occupational pensions/PRSAs/AVCs with effect from December 2002, ie. last year was the first time you could backdate. Are we talking about the same thing?
 
> Are we talking about the same thing?

I'm not sure! I definitely made a lump sum personal pension plan contribution in October 2003 and claimed tax relief on it afterwards by simply writing to directly Revenue in February 2004 outlining the details. I'm pretty sure that I did this several times in the past (pre 2002) on both occupational/AVC and personal pension plans (RACs) but I'd have to check my records to be sure...
 
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