With tax time right around the corner now is the time to make the most of your pension contributions by taking advantage of the government’s tax back scheme.
Claiming your reward for saving for your retirement is easy and straightforward when you make a lump sum top-up payment to your pension.
Known as an Additional Voluntary Contribution (AVC), your top-up needs to be made by 31 October 2018 to claim the tax back for the 2017 tax year.
Here’s how it works.
As an example, if you are in the marginal tax bracket (paying 40% income tax) and want to top up your pension with an AVC of €1,000:
– Pension pot topped up with €1,000
– Claim your tax back of €400
– Actual cost to you is €600
Please note that entitlement to tax relief is not automatically guaranteed. You should speak with your advisor first regarding your situation.
How does the tax back benefit you?
Following the previous example, your pension pot has received the full benefit with a €1,000 top-up.
Then, this year you can claim at your marginal tax rate of 40%, giving you €400 back in your pocket in 2018. That means your pension top-up actually only cost you €600, despite your pension being €1,000 healthier.
To take advantage of the AVC you need to make your top-up prior to 31 October 2018. Get in touch with one of our qualified financial advisors who can help you manage the process. Give us a call today on 091 670 123.