Revenue Tax Relief Deadline – Three reasons not to leave it to the last minute!

 

All professions have their busy time of year, and it’s no different for the Financial Planners at IPF. For us, the busiest time of year is October. Why? It’s the end of the tax year.

 

Many people think the tax year runs from January to December, but in actual fact, Revenue gives you ten months’ grace to claim back tax reliefs missed for the previous tax year. Simply put, if you didn’t use all of your Revenue pension allowance in 2022, it’s not gone until after the deadline of October 31st 2023. (This date is extended to 15th November 2023 for customers registered with ROS). 

 

Great news. This allows people to make a lump sum payment into their pension plans and get a tax rebate into their hands. 

 

For example, let’s say your advisor calculates that you have €10,000* that you could have paid into your pension in 2022 and received tax relief on. You can now make a payment into your pension (up until this deadline) and IPF will issue you with a receipt. You simply submit this receipt to Revenue, who will issue you your tax rebate. In this example, this would equate to €4,000 if you’re on the higher rate of tax. That’s tax relief that could have been lost to you had you not taken action. 

 

This is an extremely attractive option, especially for those clients who are getting closer to retirement and indeed, those who have money on deposit idly doing nothing.

 

But human nature being what it is, the vast majority of people leave it until the 11^th hour. And what harm? Once you get it in on time, what difference does it make?

 

Here are some reasons we advise our clients to get their lump sum in early;

1. You get your tax rebate quicker. It makes sense that the less busy Revenue is before October, the sooner you get your money owed back. Wait until the deadline and invariably, your rebate will take some time.
2. The money that would have been sitting doing nothing in your current account is now invested with the potential to earn you interest.
3. That interest is free of DIRT tax in your pension, whereas it is liable to tax sitting in a regular savings plan.

Sounds like a win-win to me. So if you have the money you intend on putting against 2022 sitting ready to go, contact us today, and let’s get it done, rather than the 445pm panic on October 31^st.