Last minute tax move could save thousands
However, with the vast majority of returns now filed electronically, virtually everyone enjoys the extension for online filings. This year’s deadline is set for the 17 November meaning the countdown is on.
If you are almost finished your return but your liability is looking larger than you’d like, what are your options to reduce the amount you hand over to the Revenue? One of the most important ways of doing this is via a last-minute pension contribution.
That’s the view of Terry O’Donovan who runs TaxAssist Accountants in Blackpool: “It’s not too late to make a lump sum contribution to your pension and it can be an excellent way to save tax. Say for example you are 54, self-employed and earning €80,000. If you went to your maximum allowable contribution you could save €9,600 in tax. For those earning less, say €45,000 and perhaps 10 years younger, the relief is still worth pursuing. There is still time even if you don’t have a pension scheme set up currently - a good broker will be ready and waiting as this is a common issue.”
The maximum amounts on which tax relief may be claimed depend on your age and net relevant earnings (NRE). The rates go up as you get older so for example if you are 30 but less than 40, the maximum contribution which will qualify for tax relief is 20 per cent of NRE whereas between 40 and 50 this goes up to 25 per cent and so on.
It should also be noted that it is possible to make pension contributions after the end of the tax year and still get the benefit of the tax relief against the earlier tax year. Ultimately, the message is seek advice before you hit the pay button on your tax return!
For a free consultation, contact Terry O’Donovan on 021-2427576 in Blackpool or Clive Aherne in Washington Street on 021-2427447.