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‘Use your tax deadline extension to invest in pension’: advice for thousands who have an extra four weeks to pay

THOUSANDS of self-employed people and PAYE workers with non-taxed income have an extra four weeks to file a tax return.

Some 500,000 people pay and file a return each year.

Brokers Ireland has advised taxpayers who are due to make payments to Revenue to take the opportunity to save some of the tax they owe by making an additional contribution to their pension fund.

Self-assessed people who do not have the funds to pay tax this year
may be able to “warehouse” the amount owed, under a scheme introduced
recently by the Government.

Revenue said recently the online pay and file deadline was moved to December 10, which gives taxpayers an extra four weeks.

For those who make a physical return, the deadline is the last day of this month.

Brokers Ireland said pension contributions attract tax relief of €40 for every €100 contributed to a pension for anyone on €35,300 or more, €20 per €100 for those on lower incomes.

Director of financial services at Brokers Ireland Rachel McGovern
said this has been a very difficult year and many people are under
severe financial pressure arising from the pandemic.

“But where they can afford to contribute to a pension it is advisable to do so, given the very attractive tax relief,” she said.

“The extra four weeks will give some extra breathing space in what has been a very pressurised year for so many.”

She said those who are self-assessed
are this year able to defer their taxes due to Revenue for a whole year,
subject to certain conditions.

These ‘warehousing’, or deferral
measures, have been brought in by the Government to help alleviate
financial difficulties arising from the fallout from the Covid-19

Ms McGovern said the important thing to remember is it’s a payment deferral, not a write-off.

“In the case of tax due to Revenue,
as opposed to the pension contribution, the full amount will need to be
paid eventually and provided a Revenue return is made this year, as in a
normal year, those availing of the deferral will have a full year to
make the actual tax payment without incurring any penalty whatsoever.”

She said Brokers Ireland would advise not deferring payment unless it is absolutely necessary.

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