High earners can beat a Budget 2011 cut in pensions tax relief if they top-up their pensions before 31 December next.
This week’s Budget cut the earnings ceiling for tax relief on personal pension payments, from €150,000 to €115,000. This means that, from 1 January 2011 onwards, the tax relief claimed by a high-income earner in respect of pension payments is limited to the first €115,000 of their earnings.
Liam Ferguson, of Ferguson and Associates has kindly confirmed to me that this lower ceiling relates to ALL contributions physically made in 2011. This includes contributions made by 31 October 2011, which can be backdated to the 2010 tax year for tax relief purposes.
So if you are in a high income bracket, and you leave it until next October to pay a Personal Pension contribution for 2010, the lower ceiling will apply to your contribution.
However, if you top up your pension by 31 December 2010, before the higher €150,000 earnings ceiling expires, you can still avail of the higher ceiling.
21 days left to act…