Anyone who is Self-Employed or a Company Director is required to file their full tax return through Revenue Online Services (ROS) by the 17th of November 2021.
This means that for anyone who is Self-Employed and wishes to make a contribution to their Personal Pension or PRSA – They must make the payment before the 17th of November online on ROS to avail of pension income tax relief.
As a self employed person, Income tax relief is available against earnings derived from your employment for your Pension contributions, and it is important that you have information in order ahead of the pension tax deadline.
If you’re self employed or gain income from non-PAYE sources, you need to be self assessed by ROS. This is where you calculate your owed income tax for the current year yourself, every year. More importantly, because you’re doing it yourself, you can make tax deductions to reduce your tax liabilites.
What Pension plans can claim tax relief?
Income tax relief is available on any of the following pension plans:
- Personal Retirement Savings Accounts (PRSA’s)
- Occupational Pension Schemes
- Retirement Annuities
- Some overseas plans
How much relief am I eligible for and what are the limits?
Pension Income Tax Relief on Personal Pension Schemes is available at your marginal rate of tax and is capped at an income of €115,000. If you are self-employed, you must include your pension contributions in your self-assessed tax returns in order to claim the below percentages. Any payments that exceed the limit for the year can be carried forward into the following year. The max contibution age is 75 years old.
There are no limits on the total amount you can pay into your Pension, but tax relief is only available on the percentage amounts of your income and age outlined below:
| Age during the year | Percentage of earnings |
| Under 30 | 15% |
| 30 – 39 | 20% |
| 40 – 49 | 25% |
| 50 -54 | 30% |
| 55 – 59 | 35% |
| Over 60 | 40% |
For example – An employee who is 42 years old and earns €40,000P/A is eligible for tax relief on annual pensions contributions up to €10,000.
Example 2 – Monthly contribution = €100. Marginal Rate of tax = 40% = €40. Cost to you €60.
€40 per month doesn’t sound like much, but take it into context.. If you are a 30 year old aiming to retire at 65, and contribute €100 per month for 35 years.. that €40 turns into €16,800, which you would have had to pay in tax but is now sitting in your Pension fund. If you’re not sure you’re making the most of your current pension, we highly advise having a Pension Review carried out.
What if I don’t have a Pension yet?
Personal Pensions are relatively straight-forward and easy to set up. Our expert Pension advisers can guide you towards the latest most suitable funds to maximize your returns from your new Pension.
Without a private pension plan, any self-employed Irish person will have to rely solely on the State Pension. This is currently only €248.30 a week as of 2021, commencing at the age of 66, but is due to rise to age 68 in 2028.
You have two primary choices of pension plan as a sole trader/self employed individual – a Personal Pension Plan, or a Personal Retirement Savings Account. Lowquotes.ie can help with both.
If you’re completely new to all this, and not sure where to start, get in touch for a quick chat with our team for free pension advice.
PRSAs
PRSAs are most suited to individuals who wish to pay into a pension but are uncertain about cash flow and availability of an income stream or if there is a possibility of not being self employed in the near future. An example here would be the possibility of changing from sole trader to a Limited Company (Employee).
Non Standard PRSA: Offer a wider variety of fund options than a standard PRSA, but can be subject to higher charges.
Standard PRSA: Slightly more restrictive fund options but generally the fund choices are broad enough to suit most individuals.
You can learn more about PRSAs here.
Personal Pension Plan
Suited for those who are seeking broad-ranging investment options with no contribution charges & are likely to continue as a sole trader into the future until retirement. Minimum drawdown age is 60 and 25% tax free lump sum (As is with a PRSA), also with the option to purchase an Annuity / Reinvest in an ARF/AMRF.
If you’re someone who would be more inclined to unlock their pension early, our advice on how to transfer your benefits can be found here.
For more information
Arrange a free appointment online or call 1800-828-800 to speak with one of our advisors today who will handle your case from start to finish.
Let’s talk Pensions
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