Pension AVC for 2022

[dianes]

I’m looking to make an AVC lump sum to my pension for 2022 to maximise tax relief.

However, I received a salary increase in April 2022.

In order to calculate my max contribution (20% threshold), do I calculate it as:

A) (Jan - Mar Salary x 20%) + (Apr-Dec Salary x 20%)

B) Or am I entitled to just calculate it using the higher salary over the 12 months

Thanks for any help.

 

[letmebeyourshelter]

@dianes Just check your last payslip for the year and there you can see the whole amount you earned for that year. Do 20% and minus the money you already paid. The rest you can do as AVC.

 

[vescd]

@dianes A - and congrats if you’re at that. You can contribute more, it’s just taxed

 

[gitz]

@dianes It would be A, as that is your gross taxable earnings for the year.
Don't forget if you got any bonus in 2022 that also counts towards it.

 

[dianes]

@gitz Oh interesting - I already did an AVC through my employer for the bonus. But am I correct in assuming then my it’s still scenario A + bonus becomes the amount I calculate my 20% threshold on?

 

[renewright]

@dianes It's whatever your taxable income for the year was from that employment

 

[gitz]

@dianes Presuming you're aged 30-39 which is why you're saying 20%, then yes. It is your gross earnings for the year which for most PAYE employees is salary + bonus.

Some employers don't do pension contributions on bonuses (mine won't) so although I max AVCs through payroll I still have a small AVC that I make every year to contribute what I can from my bonus.

 

[dianes]

Thanks this has been very helpful. I’ve also come to learn it’s the pay for USC figure on my payslip/Revenue.ie so I can also include bonus and notional pay.