I was not expecting them to do so ,they would have announced all the good news on budget 2019 the review was a way of keeping the insurance lobby group off the airways ,they will all be on holidays now good timing I would say,interesting article in Sunday Times today. Department of Finance don’t believe there is any reason to reduce exit tax.
Reasons being (paraphrasing).
No evidence that it is deterring investors from taking out insurance contracts
Investment performance has been poor so no gains anyway(!)
Insurance cos, brokers etc get fees anyway. (I think the implication is that regardless of investment returns insurance co and fund managers etc get fees whereas govt only gets something if there is a gain)
It shouldn’t move in line with dirt as deposits and investment funds are different animals.
I note ISA/PEPs are uk you also used sterling 15000, unless it is set up correctly Revenue in Ireland will be taking there share if they know/find out about it,It's an insane rate of taxation for this type of product and I doubt very much that it is the current consensus within the Department that there's "no justification".
The quality of (wishy-washy) reasons cited above are testament to that, as there are some pretty smart folk working in the DoF.
There's something bizarre about the way the tax is being ignored though. If the Minister/DoF are using the tax treatment of pensions as a stick to beat product providers with on exit tax then that's just ridiculous.
There's a 1% Government Levy on every contribution to a savings/investment plan. The current tax rate on any growth is 41%, payable on a 'chargeable event' (claim, partial/full surrender, maturity or every 8th policy anniversary). You can't off-set losses on one investment with gains on another.
Yes, taxation rate shouldn't be a barrier to a savings/investment plan, but folk will consider it and it is a deterrent to some. Yes, we don't know what the rate will be in 8 years time but.....
As an aside, the vast majority of these savings/investments don't get to year 8.
The cumulative performance (before deduction of charges) of one moderate fund over the last 8 years is circa 60% - 41% of that is nice pickings.
I haven't looked at the ISA in a while, but last time I did you could save £15,000 pa and have no tax liability.
It's a strange one.
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