Income Tax and Pension Deadline – Taking Action before your annual tax return
Although, like all dates, it comes around each and every year, this one (extended this year) can throw up more than its fair share of complications on an annual basis.
On or before 10 December people in the self-assessment system must submit their personal tax return (declaration of income and capital gains) and pay their income tax balance for 2019, while also making a preliminary tax payment for 2021.
You have one last chance to reduce your income Tax Bill – by making a lump sum pension contribution.
If you want advice now on how to make a lump sum pension investment instead of paying an unnecessary large portion as tax, contact Allied Financial 096 60044


How does a Pension Contribution reduce your Income Tax liability?
One of the significant advantages of pensions when compared with other forms of saving is the tax relief you can get on contributions, investment build-up and some benefits. You receive tax relief on your own contributions to a pension arrangement within certain limits and you are generally not taxable on your employer’s contributions, if any (effectively this is tax-free pay). Investment returns earned by pension schemes are also exempt from capital gains and dividend income tax and the lump sum you can take at retirement is tax-free up to certain limits. For individuals who pay income tax at 40% and invest €10,000 in a Pension, the net cost is €6,000 when they claim tax relief on eligible contributions, within Revenue limits related to age and earnings. That’s equivalent to a return of 66% on your net contribution.Where should you invest your pension?
At Allied Financial, we review the best managed pensions in Ireland and can place you in the correct fund for you – whether you are investing a lump sum and/or making regular payments.
At Allied Financial ‘Our Loyalty is to our Client’, a leading pensions and investment broker providing advice to companies and individuals who are seeking to improve their portfolio performance and reduce excessive management fees.
As a non tied Broker, we can source the best options in the market for you, to help support you in your life choices, whilst creating a robust investment strategy.

HOW MUCH TAX RELIEF DO I RECEIVE FOR A PENSION CONTRIBUTION?
The amount of tax relief you can get on your own contributions to a pension depends on your age. Tax relief is granted at your marginal (highest) tax rate. But there is no relief in respect of PRSI and the Universal Social Charge. Historically, such reliefs were available but in recent years have been abolished.
Each individual is entitled to a maximum annual amount of earnings for which tax relief is given. This is currently (2016) €115,000 and its adjusted periodically by the Minister for Finance. If you make contributions, but do not get tax relief on them because you exceed the tax relief limits, you can apply for tax relief on these contributions in the future.
WHAT ARE THE CURRENT TAX RELIEF RATES?
Please see the table below which illustrates the maximum tax relieved contributions an individual can receive under current Revenue Limits.
Age | Contribution Limits for Relief as a % of Net Relevant Earnings |
Under 30 | 15% |
30-39 | 20% |
40-49 | 25% |
50-54 | 30% |
55-59 | 35% |
60 and over | 40% |

Tax on lump sums at retirement
The first €200,000 of pension lump sums payable is currently (2016) tax free. This is a total lifetime limit even if lump sums are taken at different times and from different pension arrangements.
Lump sums between €200,001 and €500,000 are taxed at 20%, with any balance over this amount taxed at your marginal rate and subject to the Universal Social Charge.
The amount of cash you can take out of a pension arrangement is limited, with different rules applying depending on the type of arrangement you have.
- For RACs, PRSAs and people transferring to AMRF/ARFs at retirement, the cash limit is 25% of the retirement fund.
- The amount of cash you can get from an occupational pension scheme at normal retirement age is broadly 1.5 times your Final Remuneration, if you have completed 20 years’ service & have no benefits from a previous scheme.
At Allied Financial ‘Our Loyalty is to our Client’, a leading pensions and investment broker providing advice to companies and individuals who are seeking to improve their portfolio performance and reduce excessive management fees.
As a non tied Broker, we can source the best options in the market for you, to help support you in your life choices, whilst creating a robust investment strategy.
New Pension Enquires
If you are considering taking out a new pension complete this form and Allied Financial will analyse your profile and revert with some options.
All Information is received in the strictest of confidence.
Current Pension Review
In supporting and advising you on your current pension plan, Allied Financial will review your data and compare it to other similar pension plans, to ensure you have the best policy available to you. All Information is received in the strictest of confidence.
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Ready to have a conversation?
If you’d like to have an informal, no obligation, conversation about how we can help you Start Saving today, please get in touch.
New Pension Enquires
If you are considering taking out a new pension complete this form and Allied Financial will analyse your profile and revert with some options. All Information is received in the strictest of confidence.
Current Pension Review
In supporting and advising you on your current pension plan, Allied Financial will review your data and compare it to other similar pension plans, to ensure you have the best policy available to you. All Information is received in the strictest of confidence.