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tax relief calculation help please

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  • 18-11-2015 2:26pm
    #1
    JGHelp
    Registered Users Posts: 3 ✭


    Hi,

    Thanks in advance for any advices.

    I am newly self employed (trading 1 year). If i have a tax bill of 5,000. i wanted to ask about my allowances for pension and phi contributions.

    I am 30 years of age so i think i can contribute 20% of my net relevant earnings will be approx €23,000.

    So if i maximise my contributions i can contribute €4,600.

    Also i contribute to a phi policy. I pay approx 45 a month. That's €540 a year. So can I claim 20% of that as well? (€108).

    In full then is it possible to write off €4,708 of the €5,000?

    Thanks for your help

    JG
    Tagged:


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    #2
    Alan Shore
    Registered Users Posts: 735 ✭✭✭Alan Shore


    Pension and PHI contributions are deductions from taxable income.

    So if you have an income of €23,000 and contribute €4,000 to a pension and €500 to a PHI, then you pay tax at 20% on €18,500 thereby saving €900.


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    #3
    dbran
    Moderators, Business & Finance Moderators Posts: 2,094 Mod ✭✭✭✭dbran


    So you are spending €4500 on pension and PHI so as to get €900 off of your tax bill. Great if you are needing to put money into a pension and the decision has already been made. Not so great if you dont have €4500 to spare as it goes into an inaccessable pool of money that you cant touch until you retire.

    dbran


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    #4
    JGHelp
    Registered Users Posts: 3 ✭JGHelp


    Alan Shore wrote: »
    Pension and PHI contributions are deductions from taxable income.

    So if you have an income of €23,000 and contribute €4,000 to a pension and €500 to a PHI, then you pay tax at 20% on €18,500 thereby saving €900.

    Hi Alan,

    Thanks for the help with this. I am new to the game and I am also looking to employ someone this year. I don't know if you can help with this particular question but they have pension they are contributing €173 to a month NET from their account. I want to do this for them via payroll. Do you know how i work out what the gross amount i need to put through their pension for payroll is? I hope to have them on €40,000 as a salary for the year and they are late 30s nearly 40.

    Any advice or help calculating would be great. I just got payroll software that I am sure will help me with this in the future but you were very helpful already so I said i'd ask.

    Thanks again


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