787X PEPPs – method of granting relief for PEPP contributions

Summary

This section sets out the method for granting relief for PEPP contributions. The relief is given as a deduction from or set-off against relevant earnings (from a trade, profession or employment) for the year of assessment for which the premiums are paid. Any excess of contributions over the allowable contributions may be carried forward to subsequent years.

Details

Method of giving relief

(1) Relief from income tax in respect of PEPP contributions is to be given only to an individual with a source of relevant earnings from a trade, profession, office or employment.

(2) Relief is to be given by deduction from, or set-off against, the assessment on relevant earnings for the year of assessment in which the contribution is paid.

(3) Where a contribution to a PEPP is paid after the end of a year of assessment but on or before the specified return date for the chargeable period, an election may be made to have the contribution treated as if it was paid in the earlier year but where:

• an election to offset contributions exceeds the max amount of reduction that can be made in a year based on the individual’s relevant earnings for that year, or
• the PEPP contributions itself exceeds the increase in the max amount allowed on the assessment,

the election shall have no effect on the excess.

Carry-forward of relief

(4) & (5) Where, because of an insufficiency of net relevant earnings, full relief cannot be given for a year of assessment in respect contributions paid in that year, the unrelieved amount may be carried forward to the next or succeeding years and treated for the purposes of PEPP relief as a qualifying contribution paid in that or those years. Where relief cannot be allowed because of the earnings cap, this disallowance will be treated as arising because of an insufficiency of net relevant earnings.

(6) Where the “net relevant earnings” as determined for a year are subsequently adjusted, any relief granted on the basis of the unadjusted earnings is also adjusted as necessary.

(7) Where relief is granted under the section in respect of a contribution, relief is not available under any other provision of the Income Tax Acts in respect of that contribution.

(8) Where approval of a PEPP is withdrawn pursuant to Article 8 of the PEPP Regulation, an assessment will be made for the purpose of removing any relief given under this Chapter.

Relevant Date: Finance Act 2024