The methods of legitimately reducing your income tax bill have diminished greatly over recent years. This applies to self-employed individuals, PAYE employees and Directors of companies alike. A simple example of this, is tax relief on medical expenses has halved to 20%, and such modest relief is even subject to conditions.

Some financial stability has been restored in Ireland. The economy and incomes, and hopefully your disposable income, is improving. As a result personal debt levels are reducing, gradually. Deposit rates are at all-time lows. Taxation of such deposits is a penal 40% on interest.

Income Tax Relief

Income tax relief is still available on pension contributions. Your retirement may seem like a long way off. Ultimately the choice of retiring or not is down to each individual. Technically, to benefit from a retirement fund you do not need to actually retire, just reach a certain age i.e 60 or 65.

Personal pension plans are designed to give yourself the option in the future of being able to afford to retire. Alternatively, if you choose not to make provision for retirement will you be forced to continue working, for financial reasons? Personal pensions are for people who don’t have a pension scheme through work, and who want to set aside provision for their future themselves.

The good news is the income tax benefits of pension funding are still unrivalled. The caustic pension levy on personal pensions is gone. Tax-free investment growth on pension funds continues. Therefore you can still turn €6,000 into €10,000 if you are paying the marginal rate of income tax.