Winston S. Churchill: “We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
It’s that time of year again for the Self-Employed where you get the joyous news of what size cheque you need to send to Revenue. The tax return deadline for the Self Employed is October 31st , or November 12th if you or your Accountant are filing your tax return using the Revenue Online System (ROS).
We all need to pay our fair share of income tax but is there a way of lessening some of the pain?
What can you do to reduce your Income Tax liability?
The simplest and most effective way to reduce your income tax liability is to make a payment into your Pension. This is because Revenue allow tax relief on Pension contributions.
You can backdate a personal pension contribution, paid before the October / November deadline, to the immediate previous tax year for tax relief purposes.
What is the practical implication of doing this?
You are entitled to claim tax relief at your marginal rate of income tax of up to 40%. This means for example that if you make a €10,000 Pension payment you can potentially reduce your income tax bill by €4,000 (€10,000 x 40%). On top of this, investment gains made in the pension fund are also free from tax as it grows in value.
Think of it as writing a cheque to Yourself as opposed to Revenue!
We have been advising clients all over Ireland for many years, showing them how to make smart decisions when it comes to reducing their income tax liability using effective pension planning.
Call or email us today and we would be delighted to guide you through your options.
Michael Coburn BBS, QFA, FLIA, LCOI, RPA, SIA
COMPLIANCE & FINANCIAL MANAGER
Michael has been providing tax, investment and lifetime financial planning advice to clients since 2005. He has an in-depth understanding of Business Owners and their requirements, which allows him to guide his clients through the complex world of long-term financial planning.