The 2024 pension tax deadline is rapidly approaching, and it is vital for individuals in Ireland to understand their obligations, especially if they plan to benefit from tax relief on pension contributions. Pensions provide a tax-efficient method of saving for retirement, whether you are self-employed, a member of a company pension scheme, or in non-pensionable employment. This guide outlines what you need to know about meeting the pension tax deadline in 2024, filing your tax returns, and making contributions to your pension.

Who Needs to File a Self-Assessment Tax Return?

In Ireland, the following individuals are required to file self-assessment tax returns:

• Self-employed individuals: Those earning income from a trade or profession.
• Proprietary directors: Directors who hold more than 15% shareholding in a company.
• Individuals with non-PAYE income: Those who earn additional income outside regular employment, such as rental income.
• Members of company pension schemes making Additional Voluntary Contributions (AVCs): This is crucial for those who wish to backdate their income tax relief to the 2023 tax year.

Individuals falling into these categories must submit their 2023 Income Tax Return by the deadline of 31 October 2024 or 14 November 2024 if using the Revenue Online Service (ROS).

Additional Voluntary Contributions (AVCs) and the Pension Tax Deadline

AVCs are a way for employees in company pension schemes to make additional contributions beyond their regular pension contributions, allowing them to potentially boost their retirement savings. AVCs can be particularly advantageous when it comes to claiming tax relief, as they offer the opportunity to backdate contributions to the previous tax year.

If you make an AVC in 2024, you can apply the tax relief to your 2023 income, thereby reducing your tax liability for that year. This is a crucial benefit for those seeking to lower their tax bill while enhancing their retirement pot. However, to benefit from this backdating, both the pension contribution and the filing of your tax return must be completed by the relevant deadline—either 31 October or 14 November 2024 (if using ROS).

Filing Tax Returns Through ROS

The Revenue Online Service (ROS) is a convenient way to file tax returns electronically, but it requires registration well before the deadline. Those seeking pension tax relief on contributions to PRSAs or other pension schemes must use ROS to submit a Resident Registration Form.

To complete the process through ROS, you will need the following documents:

• Date of pension contribution payment
• Total amount paid
• Type of pension contract
• Policy or scheme number
• Name and address of the pension provider
• Name and address of the contributor
• Confirmation that tax relief has not already been applied through salary deductions

Missing the deadline can result in surcharges, interest, and the inability to backdate the tax relief to the 2023 tax year, which can have a significant impact on your overall tax savings.

AVCs: Key Considerations for Employees in 2024

For employees who are part of a company pension scheme, AVCs provide a unique opportunity to further optimise retirement savings and benefit from tax relief. By making an AVC, you can contribute more than what is deducted through your regular payroll, which can then be offset against your taxable income for 2023, provided all conditions are met.

Why AVCs Matter for the 2024 Deadline:

• Backdating Tax Relief: Contributions made before the pension tax deadline in 2024 can be used to reduce the income tax you owe for the 2023 tax year, offering immediate tax savings.
• Flexibility in Contributions: Employees have the flexibility to make one-off AVCs or more regular payments, allowing for better control over retirement planning and tax management.
• Higher Contribution Caps: The age-related contribution limits apply to AVCs as well, so older employees can contribute a higher percentage of their earnings with the potential for more significant tax relief.

Self-Employed Individuals and Pension Contributions

Self-employed individuals must pay special attention to the deadlines for both pension contributions and tax return submissions. Like employees making AVCs, self-employed individuals can also backdate their pension contributions to the previous tax year to reduce their 2023 tax liability.

Steps for Self-Employed Individuals:

• Pay your pension contribution to the life office or PRSA provider by 31 October or 14 November 2024 (if using ROS).
• File your tax return by the same deadline to backdate the tax relief to 2023.

Maximum Pension Contributions for Tax Relief

Pension contributions eligible for tax relief are capped by two limits:

1. Age-related percentage limits: The percentage of earnings you can contribute increases with age:
   • Under 30: 15% of earnings
   • 30-39: 20% of earnings
   • 40-49: 25% of earnings
   • 50-54: 30% of earnings
   • 55-59: 35% of earnings
   • 60 and over: 40% of earnings
2. Earnings limit: The maximum earnings limit of €115,000 applies to all pension contributions, including PRSAs, personal pensions, and AVCs. This means the total contribution cannot exceed this limit for the purposes of tax relief.

Pension Tax Relief for Employees in 2024

Employees can also take advantage of the pension tax deadline to claim backdated income tax relief. However, there are some key rules to consider based on the type of employment and pension plan:

• PRSA or Personal Pension: Suitable for employees with Schedule E income in 2023 who were not covered by their employer’s pension scheme.
• AVC or PRSA AVC: Applies to employees already in their employer’s pension scheme in 2023 who wish to make additional contributions.

Deadlines for Employees:

Employees must make their pension contributions and submit their tax return by 31 October 2024. If filing through ROS, the deadline is extended to 14 November 2024. It is essential for employees to confirm that no tax relief has already been applied through payroll deductions, as this would impact the backdating of tax relief.

Consequences of Missing the Deadline

Failing to meet the pension tax deadline can have significant consequences. Not only might you face penalties or surcharges, but you will also lose the ability to backdate your pension contributions to 2023, thereby missing out on potential tax savings.

If you cannot pay the full tax due, it is still important to file your return on time to avoid penalties. Revenue has made it clear that timely filing is essential, even when payment cannot be completed immediately.

Pension Contributions for Individuals with Dual Incomes

For those with both employment and self-employment income, pension contributions and the related tax relief can be a little more complex:

• Earnings Limit Considerations: Pensionable income from employment is the first to be considered against the €115,000 earnings cap. This means that if your pensionable income exceeds this limit, you cannot claim further tax relief on pension contributions from your self-employed earnings.
• Proportional Relief: If your total income is under €115,000, you may apply the tax relief proportionately across both income sources.