Tax saving opportunities for employees
Employees may be entitled to a refund of some of the Income Tax they paid in 2022. This can be achieved by personally making a lump sum contribution by 31 October 2023 (or 15 November 2023 for ROS users) and electing to backdate the tax relief to 2022.
What type of pension plan?
- If you are an employee who is a member of your employers occupational pension scheme, you can make additional voluntary contributions (AVC’s) to your occupational pension scheme (subject to scheme rules), to a Group Additional Voluntary Contribution (AVC) arrangement or to a PRSA AVC plan.
- If you are an employee who is included in a PRSA to which your employer is contributing, you can make employee contributions to that PRSA plan or another PRSA plan of your choice.
- If you are an employee and is not included in an occupational pension scheme or PRSA to which your employer is contributing, you can make contributions to a Personal Pension plan or a PRSA plan
Tax saving opportunities for self-employed
For those who are self-employed you must calculate their tax liability and make a payment by 31 October 2023 (or 15 November 2023 for ROS users) in respect of their:
- Final Tax Assessment for 2022;
- Preliminary Tax for 2023
You can reduce your 2022 Final Tax liability and your 2023 Preliminary Tax liability by making contributions to a Personal Pension Plan or PRSA and electing to backdate the tax relief to 2022
Tax saving opportunities for proprietary directors
Proprietary directors (i.e. a director who owns or controls more than 15% of the shares in their company) are obliged to file self-assessment tax returns by 31 October in respect of the previous year, even if all of their income is taxed under the PAYE system.
If your income includes non-PAYE income you must pay any balance of Income Tax, PRSI and USC outstanding from last year. You will also need to consider paying Preliminary Tax for the current year
You can reduce your 2022 total tax liability and you may even receive a refund from the revenue. This can be achieved by personally making a lump sum pension contribution by 31 October 2023 and also by this date electing to backdate the tax relief to 2022.
Tax saving opportunities for Public Servants
For public servants a review must take place to determine the scope for the AVC which can be made in terms of obtaining Tax Relief. When determining the scope for that Additional Voluntary Contribution, a number of factors come under consideration.
Gross earnings can be confirmed by reviewing the payslip for the last payroll period in the relevant year or obtaining an Employment Detail Summary from the Revenue website. There is also an overall upper limit on the amount of earnings that may be taken into account for the purposes of giving tax relief. The earnings cap is currently set at €115,000.
Age Related Limits
There is also an age-related percentage limit of an individual’s relevant earnings. The maximum amount of pension contributions which an individual may claim tax relief may not exceed the relevant age-related percentage of the individual’s earnings in any year of assessment. A review must take place to determine the scope for the AVC which can be made in terms of obtaining Tax Relief.
The age related percentage applicable is based on the age attained in the year of the income. So if you are pensioning the previous year’s income, you need to take into account the age attained in that year.
If you need any other information or if you have any questions please contact Frank Ryan Financial Services