These figures are based on a typical customer and your client should seek professional tax advice as the information given is a guideline only and does not take into account your personal circumstances.
If your client pays income tax under self-assessment, they are typically required to file a return and pay the balance of tax outstanding for the relevant tax year at the same time as they are required to pay premliminary tax for the following year. By reducing their tax liability for the relevant tax year your client may also be able to reduce their preliminary income tax for the following tax year by up to the same amount. This could reduce their preliminary income tax and defer this tax payment until their final income tax return for the following tax year.
Limits are for tax relief on contributions to PRSAs, RACs and Employee contributions to Occupational Pension Schemes (including AVCs). An earnings cap applies for tax relief purposes to aggregate contributions to PRSAs, RACs, and employee / AVC contributions to occupational pension schemes. For occupational pension schemes the total contribution (employer and employee) must be within overall Revenue maximum contribution levels.
Under current legislation the maximum pension fund allowed for tax purposes is €2,000,000. The relevant maximum will apply to the aggregate value of all pension provision held by an individual. Any fund in excess of this amount will be liable to a once-off income tax charge at the 40% rate on retirement.
Your client is not guaranteed income tax relief. They will generally get income tax relief up to the limits outlined, but this will depend on their own personal circumstances. If your client is an employee and their personal contributions are taken from their bank account, they can apply to their local Inspector of Taxes to have their tax credits adjusted to reflect their pension contributions. If they are self employed they must include their pension contributions in their self assessment tax returns in order to get income tax relief.
This quotation is valid until your client's circumstances change.
Pension income in retirement is subject to income tax at your highest rate on withdrawal, Universal Social Charge (USC), PRSI (if applicable) and any other charges or levies (tax) applicable at that time.
Information is correct as at May 2016.