Pension bombshell won't hit everyone
Published 18/01/2012 | 06:00
Letters recently issued to farming pensioners regarding the alleged underpayment of taxes have caused a lot of distress and confusion.
The Revenue have decided to reduce pensioners' tax credits and standard rate tax bands to account for this income.
Effectively, this means that the tax on the State pension will be collected at source via the PAYE system by increasing the weekly or monthly tax paid on pensions subject to PAYE tax at source.
However, many of the pensioners that got these letters will not be subject to additional taxes.
If you think you might be liable for additional taxes, here's some important starting points.
The most common pension for farmers is the State contributory pension, which is available to those who have made sufficient PRSI contributions.
The basic rate for a person under 80 is €230.30 per week, or €11,975.60 per annum.
The tax on this income depends on the tax credits available to the person, his/her standard rate tax band, and his or her other income. If the entire amount is taxable at 41pc, with no tax credits available, the tax liability will amount to €4,910 -- a substantial annual figure.