Tuesday, 13 April 2010

Don't forget to tell the taxman

If you're a PAYE employee and have a private pension policy that's paid through your bank account by Direct Debit (and NOT through your salary) you presumably have applied for and received your tax relief by way of extra Tax Credits. (You have got around to applying for your tax relief, haven't you? If not, do it NOW!)

Two things to remember: -

(1) You can also apply for a refund of Employee PRSI on the contribution at the end of each tax year, provided that you've already been granted the tax relief. Use this form.

(2) If you increase, reduce or stop your contribution, don't forget to let Revenue know. Revenue usually grant extra tax credits on pension contributions on the assumption that the contribution will remain the same until further notice. So if, for example, you stop your contributions altogether, you must notify Revenue or else you'll continue to get tax relief on a contribution you're no longer making and will have to give it back eventually. On the other hand, if you increase your contributions, you won't get your extra tax relief until you let Revenue know.

This applies to PAYE employees with Personal Pensions, PRSAs or AVC PRSAs who are paying their contributions gross and NOT via a salary deduction arrangement.


Tommy McGibney said...

Very good points Liam. Another important issue to note is the "four year rule". Revenue use this rule to routinely disallow tax refund claims that relate to tax years more than 4 years ago.

For example, in 2010, you can only claim tax refunds for 2006 and later years. From 1 January 2011 onwards, it will only be possible to claim refunds for 2007 and later years, meaning that from that date anyone entitled to a 2006 tax refund will lose this entitlement forever.

Liam D. Ferguson said...

Thanks for this Tommy.

I know that there are plenty of people out there who have been remiss about claiming all their entitlements due variously to lack of awareness, procrastination or pure laziness!

In these times when every cent counts, wouldn't it be a great exercise for everyone to put aside just a couple of hours to make sure they have claimed every relief to which they are entitled since 2006? It could be a profitable couple of hours work.