Revenue published an article from Tax Briefing 74 dealing with tax relief for pension contributions and the application of the earnings limit. The article outlines the operation of the earnings limit where an individual has both employment earnings and self-employment income and contributes to both an occupational pension scheme and a personal pension plan.

The article notes that the maximum tax relief for an individual on pension contributions paid in the tax year is subject to two controls: firstly an age related percentage limit on the amount of net relevant earnings/ remuneration, secondly an overall limit on the earnings which may be taken into account for the purpose of the age related percentage limit. Finance (No. 2) Act specifically reduced the earnings limit for 2009 to €150,000.

The article illustrates that where an individual contributes to a single pension product, the maximum tax relief on pension contributions is the age related percentage limit on the lower of the individual's net relevant earnings/remuneration and €150,000. Where an individual has two sources of income and contributes to more than one pension product a single aggregate earnings limit of €150,000 applies.

Example 2 of the article outlines the maximum tax relief available where an individual has employment earnings which exceeds the earnings limit and self employment income and is obliged to contribute to an occupation pension scheme. Queries have been raised by members on the utilisation of earnings limit and the order of contributions as illustrated by Example 2. Following our research, it is not immediate clear that the sequence of tax relievable contributions as outlined in Example 2 is provided for in the legislation. We are continuing to correspond with Revenue on this matter.

The full article from Tax Briefing 74 is reproduced below at 2.02.