Which statement about unused tax relief on RAC/PRSA contributions is true?

Which statement about unused tax relief on RAC/PRSA contributions is true?

• A. It must be used this month
• B. Cannot be carried forward
• C. It can be carried forward to a future year against relevant earnings
• D. It is refunded

Answer: (C)

When you make RAC or PRSA contributions, your tax relief is given at source based on your marginal tax rate. If you can’t use all that relief in the year—perhaps because your earnings are too low—the unused relief isn’t paid back or applied retrospectively. Instead, it can be carried forward to a future year to offset against your relevant earnings then. This means you don’t lose the relief; you simply claim it later when you have sufficient earnings to absorb it. That’s why the statement about unused relief being carried forward to a future year against relevant earnings is the correct one.

When you make RAC or PRSA contributions, your tax relief is given at source based on your marginal tax rate. If you can’t use all that relief in the year—perhaps because your earnings are too low—the unused relief isn’t paid back or applied retrospectively. Instead, it can be carried forward to a future year to offset against your relevant earnings then. This means you don’t lose the relief; you simply claim it later when you have sufficient earnings to absorb it. That’s why the statement about unused relief being carried forward to a future year against relevant earnings is the correct one.