You may have spent your working life in PAYE system, where tax came out before you ever saw it. Or you may have filed returns for years, for a business or a rental, and thought you knew the drill. Either way, retirement shuffles the deck. Income starts arriving from new places, and the rules about who handles the tax are different for each one.

So when a letter from Revenue arrives in the first year or two, or a friend mentions preliminary tax and you realise you don’t know if that applies to you, it can feel like something has gone wrong. Usually nothing has. Some of your income is being taxed before it reaches you, some isn’t, and the job is simply knowing which is which. That’s what this page is for.

The map

Handled, mostly: your private pension, annuity or ARF

Your provider operates PAYE on occupational pension payments, annuity income and ARF withdrawals. Income tax, USC and any PRSI due come out before the money reaches you, and you get a payslip, same as when you worked. Two things to watch even here:

  • Emergency tax in year one. Until your tax credits are allocated to your pension provider, withdrawals can be taxed at emergency rates. The fix is allocation: assign your credits to the provider through myAccount, or ring Revenue. Once the provider gets an up-to-date Revenue Payroll Notification the deductions correct themselves and anything overpaid comes back.
  • The minimum ARF withdrawal. Revenue assume you take at least 4% of your ARF’s value each year and taxes that amount whether you withdraw it or not. It rises to 5% from the year you turn 71, and it’s 6% where combined ARF and vested PRSA value exceeds €2 million. Your provider works it out and deducts the tax.

Partly handled: the State Pension

The State Pension is taxable, but it’s paid to you gross. No tax comes out of it directly. Revenue collects what’s due by reducing the tax credits and rate band applied to your other pension, so a bit more tax comes out of that one instead. That works when Revenue knows about both pensions and there’s another one to adjust. It can go wrong when the State Pension starts mid-year, when the records lag behind, or when the State Pension is your only PAYE-type income, in which case the tax on it is yours to sort under self-assessment.

When it comes to completing your Form 11, the ‘handled’ items above are the ones we can pull straight from Revenue for you. We pull through your State and Private Pension details for you directly from Revenue’s ROS. The ‘down to you’ items below are what you’ll add into FastTax.ie.

Your Responsibility: everything else

  • Deposit interest. Irish banks deduct DIRT at source, so there’s usually nothing more to do on that money. Interest from EU banks and savings platforms is another matter: it arrives with no Irish tax deducted and declaring it is your job. It’s taxed at 33%, the same as DIRT, provided your return is filed on time; file late and it can be taxed at your marginal rate instead. One nice extra for those on modest incomes: if you’re 65 or over and under the income exemption limit, you can ask your bank to pay interest without DIRT deducted at all, using a short form called the DE1.
  • Rental income. Yours to declare, minus allowable expenses, even where it’s one small property. See our guide here.
  • Dividends and shares. Dividends count as income; profits on shares fall under Capital Gains Tax, which runs on its own earlier payment dates. More info in our investing guide here. 
  • UK and other foreign pensions. The usual position: the UK State Pension is taxable in Ireland and paid gross, so it belongs on your Irish return. Most UK occupational and private pensions are also taxable here rather than in the UK, provided an exemption certificate is provided to HMRC. Some UK government-service pensions (e.g. civil service, army, certain public bodies) are the exception, taxed in the UK only unless the retiree is an Irish-national only. In that case, relief may be sought at source from HMRC.

 

The reliefs that come with age

The same system that hands you new paperwork also hands you new reliefs, and they’re under-claimed:

  • Age Tax Credit: €245 for a single person, €490 for a married couple or civil partners, from the year one of you turns 65.
  • Age exemption: 65 or over with total income under €18,000 (€36,000 for a couple) and you’re exempt from income tax altogether, with marginal relief just above the limits.
  • Reduced USC from 70 where total income is €60,000 or less

Plus the familiar ones that cluster at this stage of life: medical expenses and nursing home fees.

Which is why “do I need to file?” is only half the question. The other half is whether filing would get you money back, and for plenty of retired people the answer is yes.

PRSI largely falls away with age. You stop paying it at 66, or at 70 if you were born after 1958 and haven’t yet claimed the State Pension (Contributory). Before that, ARF withdrawals carry Class S PRSI at 4.2%. Occupational pension income itself isn’t charged PRSI.

So which are you: Form 11, Form 12, or nothing at all?

Rough guide. If everything you have is PAYE-taxed pension income: usually nothing to file, though a credits check is still worth doing. Other income under €5,000 net in the year: the simpler Form 12 through Revenue’s myAccount generally does it. €5,000 or more net, or €30,000 gross: self-assessment and a Form 11.

Form 11s made easy

If you recognised yourself in two or three of those rows, you’re exactly who we built FastTax.ie for. You set up an account, choose a plan, and answer plain-English questions in our tool. A lot of the standard detail, including PAYE pensions and social welfare payments, can be pulled automatically from ROS, so there’s no digging through statements for things Revenue already knows. Simply add us as your tax agent, and we’ll pull through your State and private pension payments and tax paid automatically.

For plans 2 + 3, a tax expert reviews everything, every relief you’re due gets claimed, and the return is filed. Done for another year, from €145, backed by our 100% Tax Guarantee. Many of our retired customers go for the full-service plan 3 and there’s always someone on the phone if you get stuck.

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