Is it possible to make pension contributions for last year?
Yes, you can.
If you wish to claim backdated tax relief on pension contributions for the previous year, you will have to ensure that your pension contribution is paid on time AND that you have submitted your claim for tax relief before the tax deadline.
This means your payment and your tax relief claim would need to be made before the tax deadline. Normally, the tax deadline would be a day in the last week in October each year and 2 weeks later if you are filling online.
I’m an employee. What does this mean for me?
An employee who is a member of a pension scheme can make an Additional Voluntary Contribution, before the tax deadline, and claim tax relief for the prevoius year. The tax deadine is a day in the last week in Oct each year.
Actions needed:
- Pay their pension contribution to the appropriate pension contract and
- Send their tax return to Revenue, electing to backdate the pension contribution to the previous tax year.
If you pay and file through ROS the deadline is extented by a couple of weeks
When an employee requests to backdate a payment, they must check to see whether any prior relief has already been granted in that tax year. Income tax relief is automatic and given in the present year when a contribution is paid through payroll under the net pay arrangement.
Are there any additional incentives for the self-employed?
If you’re self-employed, you can get tax relief on contributions to your pension by making a lump sum single contribution now and backdating it to the previous tax year. This will reduce the amount of tax you pay for that year. You can make these payments into a Personal Pension or PRSA as part of your annual tax return.
The advantage of self-employed pension contributions is that they may reduce your tax burden for the previous year. Thereby lowering your current year’s tax bill as well. When you start a pension, you get a double bonus since your actual tax rate for the prrevious year will be lower.
The deadline for making a lump sum payment (Self Employed or AVC) is before the tax deadline; the option to backdate the tax relief to the previous year must also be exercised before that date.
If you are making contributions to a regular contribtion pension plan, the contribution must be made by the tax deadline.
Are pension funds hit with capital gains tax?
No, the investment growth by the pension fund is not subject to tax (on the investment income or capital gains earned by the pension fund). However, income tax may be levied on pension benefits taken during retirement.
How do I start the process?
1: Make your contribution to your pension. Speak with your advisor or give us a call to sort this bit,
2: Make your revenue return, it must be filed on ROS to claim income tax relief on pension contributions. See www.revenue.ie for more information. If you have any questions about this process and your options, you can contact us.
If you have questions or need advice on Pensions, call 074 910 3938 or email now
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FAQs on making pension contributions for previous tax years
Can I make pension contributions for the previous tax year?
Yes. You can make pension contributions for the previous tax year as long as you pay the contribution and submit your claim for tax relief before the tax deadline. This deadline is typically in the last week of October or two weeks later if filing online through Revenue Online Service (ROS).
What is the deadline for making backdated pension contributions?
The deadline is usually a specific day in the last week of October each year. If you file your tax return online using ROS, you have an additional two weeks beyond the paper filing deadline to make your contribution and claim tax relief.
Can employees make additional voluntary contributions for previous tax years?
Yes. Employees who are members of a pension scheme can make Additional Voluntary Contributions (AVCs) before the tax deadline and claim tax relief for the previous tax year. If contributions were made through payroll under the net pay arrangement, tax relief may have already been applied.
How do self-employed individuals benefit from backdated pension contributions?
Self-employed people can make lump sum pension contributions and backdate these to the previous tax year. This reduces the tax payable for that year and can also lower their current year’s tax bill. Contributions can be made to a Personal Pension or PRSA.
Are pension funds subject to capital gains tax?
No. The investment growth within pension funds, including capital gains, is not subject to capital gains tax. However, income tax may apply to pension benefits when they are taken during retirement.
