Double-savings for re-starters
As already mentioned, the biggest draw of a pension is the tax incentives. If you were unable to make pension contributions for the past couple of years due to financial duress but are now in a better financial position and considering re-starting your pension again, you will benefit from double-savings.
The 2015 tax deadline is about finalising tax affairs for 2014 and setting the preliminary tax due for 2015. Preliminary tax is an estimate of your total tax bill for the year which you pay on the 31st of October every tax year.
The amount of preliminary tax paid for any year is not less than the lower of:
90% of the final liability for the current tax year,
the final liability to tax for the immediately previous year (100% Rule)
or
105% of the final liability for the pre-preceding year where the Collector- General is authorised to collect tax by direct debit
If you are making a pension contribution for the first time in a few years, it is likely that your preliminary tax payment for 2014 will have been overstated and this year’s preliminary tax bill will be lower than expected. Please click on link below for an example:
Example
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- Document added: 22 August 2018, 09:13