Hong Kong taxpayers can cut their salaries tax by up to HK$10,200 this year by putting HK$60,000 into tax-deductible voluntary MPF contributions (TVC) or a qualifying deferred annuity policy (QDAP), but the money has to be paid by March 31, 2027 to count against the 2026/27 bill. The Inland Revenue Department allows the deduction only for amounts paid within the year of assessment, which runs from April 1 to March 31.

That makes the next five months the planning window for the 2026/27 year. For salaried professionals in Hong Kong, the two schemes are among the few deductions that can still be adjusted late in the tax year, since rent, mortgage interest and mandatory MPF contributions are largely fixed by then.

How the HK$60,000 cap works

TVC and QDAP premiums share a single annual limit of HK$60,000 per taxpayer, unchanged for both 2025/26 and 2026/27 according to PwC's budget tax tables. The cap applies across all policies and accounts a person holds, so two annuity policies and a TVC account still add up to one HK$60,000 allowance.

The order matters. The IRD deducts TVC first, then lets qualifying annuity premiums fill whatever room is left under the cap. Someone who puts HK$45,000 into a TVC account can claim only HK$15,000 of annuity premiums, however much they pay the insurer.

The value of the deduction depends on the taxpayer's top rate. Hong Kong's progressive bands run from 2% on the first HK$50,000 of net chargeable income up to 17% on income above HK$200,000. At 17%, the full HK$60,000 saves HK$10,200, a figure the Insurance Authority also uses. A taxpayer whose top slice of income falls in the 10% band would save at most HK$6,000. High earners who pay the standard rate (15% on the first HK$5 million of net income, 16% above that) save at their standard rate instead, or HK$9,000 at 15%, by Capital Times' calculation.

Married couples can double up. If both spouses have assessable income, they can split premiums between them for a combined HK$120,000 of deductions, as long as neither claims more than HK$60,000, according to the Investor and Financial Education Council, the government's financial literacy body. A spouse with no assessable income cannot claim, and the IFEC said the working partner is then held to the individual HK$60,000 cap. TVC is narrower: only the account holder can claim, and contributions made by a spouse do not qualify.

TVC versus QDAP: flexibility and lock-ups

The two products suit different savers. TVC is the more flexible. Holders of MPF contribution or personal accounts can open a TVC account through the eMPF Platform, with contributions going straight to the scheme rather than through an employer, the Mandatory Provident Fund Schemes Authority said. Contributions can be any size, made at irregular intervals, and paused or resumed at will. That makes a single lump sum in March a workable approach.

The catch is access. TVC money, like other MPF savings, cannot be withdrawn until age 65 except on the limited statutory grounds for early withdrawal, the MPFA said. Ordinary voluntary contributions already being made through an employer's MPF account are not TVC and are not deductible, the IFEC said. For readers following the MPF's recent losses, the TVC balance is invested in the same kinds of MPF funds and moves with markets.

A QDAP is a long-term insurance contract with fixed commitments. To be certified by the Insurance Authority, a policy must require total premiums of at least HK$180,000, paid over at least five years, with annuity payments that start no earlier than age 50 and run for at least 10 years. Insurers must disclose the internal rate of return and set out guaranteed and non-guaranteed payouts separately, according to the IFEC. Premiums for any riders must also be shown separately from the annuity premiums.

The annuitant must be the taxpayer or their spouse and must hold a Hong Kong identity card at some time during the year of assessment. If a couple divorces, premiums paid in later years on the former spouse's policy stop being deductible, the IRD said. Refunds also reduce the claim, including money returned when a policy is cancelled during its cooling-off period.

Timing and paperwork before March 31

Timing follows the payment date, not the policy date. If part of a premium is paid before March 31 and the rest afterward, the IRD splits the deduction between the two years in which the money was actually paid. Buyers starting a QDAP late in the tax year should confirm with the insurer when the first premium is debited.

No receipts need to be attached to the tax return. The IFEC said taxpayers should keep supporting records for six years after the end of the relevant year of assessment. MPF trustees provide a yearly summary of TVC paid, and an insurer's annual summary or premium record serves the same purpose for a QDAP.

The deduction is claimed on the Tax Return for Individuals for 2026/27, filed after the year closes. For anyone who has not yet used this year's allowance, the hard date is March 31, 2027.

This article is general information, not financial advice.