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Which figure on my P60 should I use to determine my maximum allowed AVC contribution?

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  • 28-10-2014 10:26am
    #1
    tmh106
    Registered Users Posts: 532 ✭✭✭


    Hello everyone.

    I am a PAYE employee, and all of my income is PAYE. I am a member of my employer’s defined benefit pension scheme. I also contribute to an AVC fund. My AVC contributions are taken from payroll every month, a fixed amount each month. The amount contributed each month is decided by me at the start of the year. For 2013 tax year I did not contribute the max AVC amount that I am allowed within revenue limits (in my case 25% of earnings), because at the time I didn’t have the money to do so.

    I now have some spare cash and I would like to invest in it to top up my 2013 AVC. But when I look at my P60 for 2013 I am unsure what value to use as my earnings for 2013. There are two figures:

    1. In section A, list item 3 of the P60, there is a figure with the explanatory text: “Pay in respect of this period of employment (i.e. gross pay less any superannuation …etc.)
    2. In section D, list item 3 of the P60, there is a figure with the explanatory text: “Pay for USC purposes in respect of this period of employment.”

    The second figure is larger than the first. But which of the two should I use when calculating 25% of my earnings in order to stay within the revenue limits for tax relief purposes?

    Thanks for any help offered. The deadline for getting this into revenue is this Friday (31st Oct) so I need to move quickly on this.

    tmh


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    #2
    coylemj
    Registered Users Posts: 25,437 ✭✭✭✭coylemj


    Use the larger number. The first number is gross pay less pension contributions which is the basis for calculating PAYE, the second number is the gross number before pension contributions which is used to calculate USC. The maximum contribution (in your case 25%) is based on the gross number and note that if you have any benefit-in-kind liability because you have a company car or they are paying for medical insurance, you can add the notional benefit number on to your gross salary to calculate the maximum you can pay into the AVC.

    Obviously any contributions you made in 2013 by way of employee contributions and AVC contributions have to be deducted from the 25% in order to arrive at the max you can pay by Oct 31st 2014 to qualify for retrospective relief.


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