Everything you need to know to make a last-minute pension contribution ahead of the 2020 income tax deadline
Making a lump sum pension contribution is a great way to rapidly increase your pension provision and secure your financial future.
And now is a great time to top up your pension and claim income tax relief of up to 40% on your 2020 earnings. In plain English, that means that for every €10,000 you put in, you can claim a reduction in your tax bill of up to €4,000.
With a couple of months to go, here’s Moneycube’s how-to guide on making a lump sum contribution to a pension.
Just want to go ahead and arrange a top-up? Click here!
When do I have to do it?
The tax deadline to make contributions against 2020 earnings is approaching fast, so it’s best to act now.
The deadlines are:
31st October 2021 – If you plan to file a paper tax return
Mid-November 2021 – If you pay and file your tax returns online through ROS
Who can put money in?
Both employees and self-employed people can make a lump sum top-up to their pensions.
It doesn’t matter if you have an existing pension or not. If you paid income tax in 2020 from carrying on a trade, profession, or employment, then a pension contribution is possible.
How much can I put in?
The amount by which you can top up your pension depends on your age, as well as what you have contributed already for 2020 (for example, through your company scheme).
Depending on your age, you can put a certain percentage of your earnings into your pension.
|60 or over||40%|
There’s also an earnings limit: the maximum amount of earnings taken into account for calculating tax relief is €115,000 per year.
How much tax relief will I get?
That depends on your income – you can’t claim relief for tax you wouldn’t pay. Tax relief is granted at your highest marginal rate. So if you’re a top-rate taxpayer, then you’ll receive tax relief at 40%.
What can I invest in?
You can invest in a huge range of investment funds, company shares and other assets with a pension.
Moneycube has relationships with a number of pension providers, and can help you decide the mix of asset that’s appropriate for your requirements.