Panel H: Pension reliefs, retirement annuity contracts (RACs) and personal retirement savings accounts — page 20, lines 506-508

Q: I’m self-employed, can I claim tax relief for premiums I paid to a retirement annuity contract (RAC)? Yes, if you are a self-employed individual, a proprietary director or an employee who is not in an occupational pension scheme, you can claim tax relief for RAC premiums.

Tax relief for RAC premiums is subject to two main controls.

1. An age-related percentage limit of an individual’s net relevant earnings (see table).

2. An overall upper-earnings limit of €115,000 for 2016. This limit applies whether an individual is contributing to a single pension product or to more than one pension product.

Net relevant earnings consist essentially of relevant earnings less deductions, which would be made in computing total income for tax purposes. These deductions include losses and capital allowances.

Example: If you are aged 46, have earned €45,000 in this period and make an RAC payment of €12,000, the relief due to you is restricted to €45,000 @ 25%, i.e. €11,250. The balance of the payment, €750, may be carried forward to the following year(s) and treated as a qualifying premium paid in that year(s). Relief may be claimed at line 507 in respect of:

Premiums paid in the period January 1, 2016 to December 31, 2016

Any premiums paid in an earlier tax year for which relief has not been obtained.

CAN I MAKE A TOP-UP PAYMENT NOW AND GET ADDITIONAL TAX RELIEF FOR 2016? TOP TIP

Yes, tax relief can be claimed on your 2016 Form 11 at line 507 (c) for any premium paid between 1 January 2017 and 31 October 2017 (or the extended ROS deadline of 14 November 2017).

PRSAs, which are another type of pension product that can be availed of by self-employed individuals or by employees who do not participate in an occupational pension plan, also provide this facility to allocate a premium paid in 2017 before these deadlines to 2016 – see Line 508(e).

As both of these deadlines are fast approaching, you should contact a pension broker or financial adviser, who can advise you on your options.