What is the maximum personal contribution Sharon can claim tax relief on in 2020 given a remuneration of €100,000?

What is the maximum personal contribution Sharon can claim tax relief on in 2020 given a remuneration of €100,000?

• A. €30,000
• B. €25,000
• C. €28,750
• D. €29,250

Answer: (B)

Tax relief on personal pension contributions in Ireland is limited by an age-related percentage of your net relevant earnings. The percentage depends on your age, so the amount you can contribute and still claim relief isn’t the full salary but that percentage of NRE. In this scenario, with a remuneration of €100,000, the typical band for someone around 40–49 years old gives an age-related percentage of 25%. So the maximum personal contribution that can qualify for tax relief is 25% of net relevant earnings. Using €100,000 as a stand-in for NRE, that amount is €25,000. Any contribution above this would not attract tax relief under the standard rules. The other options correspond to higher percentages that don’t align with Sharon’s assumed age band, which is why €25,000 is the correct maximum. If Sharon’s age were different, the percentage—and thus the maximum—would change accordingly.

Tax relief on personal pension contributions in Ireland is limited by an age-related percentage of your net relevant earnings. The percentage depends on your age, so the amount you can contribute and still claim relief isn’t the full salary but that percentage of NRE.

In this scenario, with a remuneration of €100,000, the typical band for someone around 40–49 years old gives an age-related percentage of 25%. So the maximum personal contribution that can qualify for tax relief is 25% of net relevant earnings. Using €100,000 as a stand-in for NRE, that amount is €25,000. Any contribution above this would not attract tax relief under the standard rules.

The other options correspond to higher percentages that don’t align with Sharon’s assumed age band, which is why €25,000 is the correct maximum. If Sharon’s age were different, the percentage—and thus the maximum—would change accordingly.