What are the changes proposed for Employer PRSA contributions?

Following the publication of the Finance Bill 2024 last week, it has become clear that there are significant changes provided for in respect of the taxation of employer contributions to a PRSA.

In the last number of years there was capacity for an employer to make significant pension contributions to a PRSA.

These contributions were largely uncapped, and they were not subject to a BIK charge. 

However, in broad terms, Finance Bill 2024, has introduced a change here making it so that Employer PRSA contributions will be limited to 100% of the salary of the employee. 

Furthermore, any payment over and above this salary cap will be liable to BIK and this excess will also not qualify as a deductible expense for the employer. 

The Finance Bill reads such that this change is likely to be effective from 01 January 2025. However, as the Bill makes it way through various stages over the next few weeks this date may be pulled forward. 

Therefore, the message is, that you should act now and engage with your pension broker with a view on firming up on any capacity that you have to make pension contributions.

 

 

 

Date published 14 Oct 2024 | Last updated 30 Oct 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.