Pension Contributors Have Four Additional Weeks to Pay
Tue Oct 27 2020
Brokers Ireland Press Release
Those who are self-assessed for tax purposes, up to 500,000 people, this year have an extra four weeks, up to 10th December, in which to make the payment to the Revenue Commissioner, according to Brokers Ireland. Such contributions attract tax relief of €40 for every €100 contributed to a pension for anyone on €35,300 or more, €20 per €100 for those on lower incomes.
Rachel McGovern, Director of Financial Services at Brokers Ireland, said this has been a very difficult year and many people are under severe financial pressure arising from the pandemic. “But where they can afford to contribute to a pension it is advisable to do so, given the very attractive tax relief,” she said. “The extra four weeks will give some extra breathing space in what has been a very pressurised year for so many.”
She said those who are self-assessed are this year able to defer their taxes due to Revenue for a whole year, subject to certain conditions, These ‘warehousing’ or deferral measures have been brought in by the Government to help alleviate financial difficulties arising from the fallout from the Covid-19 pandemic.
Ms McGovern said the important thing to remember is it’s a payment deferral, not a write-off.
“In the case of tax due to Revenue, as opposed to the pension contribution, the full amount will need to be paid eventually and provided a revenue return is made this year, as in a normal year, those availing of the deferral will have a full year to make the actual tax payment without incurring any penalty whatsoever.”
She said Brokers Ireland would advise not deferring payment unless it is absolutely necessary. “There has been nothing normal about this year and many people are under severe financial pressure arising from the pandemic, and for them it is an opportunity to relieve that pressure, in the hope and expectation of being in a better place next year.”
“However, it will mean paying on the double next year, unless further measures are then introduced, and as of now there is no indication of that happening,” she said. “Therefore, we would advise those availing of that particular option to start putting aside securely for their taxes as soon as they possibly can so that it will not become an unmanageable burden in a year’s time,” she said.
She said the pension tax relief provision is particularly advantageous when one can get up to €40 back for every €100 contributed. For someone under age 30 the maximum they could contribute and get this relief is €17,250. That means they would get €6,900 back by way of tax relief.
For those aged 31 to 39 the equivalent figures are €23,000 and €9,200 and for those aged 40 to 49 it is €28,750 with €11,500 tax relief.
The relief continues increasing in line with age.