Retirement planning not just about October 31
THIS year’s tax returns may give rise to larger tax bills for some taxpayers and self-employed individuals, advises a leading Limerick based accountancy firm.
Speaking in advance of the annual ‘pay and file’ deadline of October 31, Anthony Browne, Taxation Partner at O’Donovan Caulfield Lavin explains,
“There are a number of reasons why bills may be larger this year. Self-employed individuals ordinarily make pension contributions to help reduce their tax bills as well as plan for their retirement. As the threshold for pension contributions has been reduced to €115,000, then tax bills will increase for some. In addition, capital allowances, which allow a taxpayer to offset certain investments against their overall tax bill, have been restricted. We will also see the introduction of the Universal Social Charge for the first time in preliminary returns for 2011 which will increase tax bills in all cases.”
Meanwhile, planning for retirement shouldn’t be just about claiming tax relief by the 31st of October explains Gerry Moran of ODCL Financial Services:
“While common practice has been to pay lump sums at this time of year into our pensions to avail of the generous tax reliefs available, in the current economic climate, many people simply cannot do this, no matter how good the tax breaks are. But people shouldn’t despair if they cannot contribute lump sums at this time of year, retirement planning should be about quantifying and understanding your needs at retirement and putting a plan in place to meet those needs. This may involve a number of different measures, not just private pension provision.”
Paying tax and completing tax returns has been exacerbated by the current economic climate where cash available to pay taxes is a scarce commodity. Anthony Browne continued; “Our advice to all self-employed individuals is to complete returns at the earliest possible opportunity to know where you stand and avoid penalties or a possible tax audit. If people have difficulty paying, then they should speak to their tax advisor and arrange with the Revenue to pay in instalments, there are a number of options available.”
There is an extension to the end of October deadline until midnight on 15 November 2011 for taxpayers who both file and pay their liability via the Revenue Online System (ROS). Preliminary Tax for 2011 tax year also has to be paid by this deadline.
Taxpayers who want to file their own Returns should ensure that they register with ROS (see www.revenue.ie) as soon as possible.
