Ways to reduce PAYE tax

I

imalwayshappy

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Hi all

Is there any ways to reduce paye tax income by way of investments? I remember years ago there was the film finance reliefs. Is there anything similar? I know the obvious one is pension contributions etc.

Thanks
 
The EII Scheme is the closest thing to what you’re asking. You can invest directly in individual companies or there are funds out there that roll-up a load of EII investments and you take a slice of that.

It’s a good scheme that genuinely helps fund small Irish businesses, but you need be very aware of the risks - these are often tiny companies, most of which will go nowhere.


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Zenith63 said:
The EII Scheme is the closest thing to what you’re asking. You can invest directly in individual companies or there are funds out there that roll-up a load of EII investments and you take a slice of that.

It’s a good scheme that genuinely helps fund small Irish businesses, but you need be very aware of the risks - these are often tiny companies, most of which will go nowhere.


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I had a list of clients who told me that they wanted ways to claim tax relief outside of pensions. So I got access to the Davy fund, one of the longest running EII schemes and very diversified. ONE client took it up.

Investing in one company is extremely high risk. These are small to medium sized businesses in Ireland (not in a global sense where Bank of Ireland are deemed small). You are much better off investing in a fund, where the companies are vetting by experienced professionals and you have a diversified portfolio of companies.
 
Steven Barrett said:
I had a list of clients who told me that they wanted ways to claim tax relief outside of pensions. So I got access to the Davy fund, one of the longest running EII schemes and very diversified. ONE client took it up.
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What would you put that down to our if interest? They’re fairly chunky funds, so obviously somebody is investing in them, is it savvy investors who see value where others don’t, or inexperienced investors who are sticking money in without really understanding it?

Did you get any information from them on historical returns? Having been on the receiving side, my basic understanding is that the investor really just gets their tax relief, Davy make their money from fees and I wonder if the winners/losers (from a capital growth point of view) more or less just balance each other out.
 
What about the exit tax and deemed disposal regime every 8 years for fund investments, does that apply to this scheme?
 
joe sod said:
What about the exit tax and deemed disposal regime every 8 years for fund investments, does that apply to this scheme?
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Deemed disposal regime not applicable to EIIS opportunities as effectively you are holding direct shares in a company. And just like shares when you sell for higher price you will have to pay tax. One interesting point is if you make a loss on EIIS shares you cannot offset it against other gains or carry the loss on your tax return.
 
Zenith63 said:
What would you put that down to our if interest? They’re fairly chunky funds, so obviously somebody is investing in them, is it savvy investors who see value where others don’t, or inexperienced investors who are sticking money in without really understanding it?

Did you get any information from them on historical returns? Having been on the receiving side, my basic understanding is that the investor really just gets their tax relief, Davy make their money from fees and I wonder if the winners/losers (from a capital growth point of view) more or less just balance each other out.
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Tyre kickers. When it came down to it, people were humming and hawwing about didn't aspects of the investment. Some wanted to have greater control over the investment process, others didn't really know what they are actually doing.

I wasn't able to get past returns. The Davy fund is going a long time and they run it with BDO.
 
silverfox239 said:
Deemed disposal regime not applicable to EIIS opportunities as effectively you are holding direct shares in a company. And just like shares when you sell for higher price you will have to pay tax. One interesting point is if you make a loss on EIIS shares you cannot offset it against other gains or carry the loss on your tax return.
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That's good to know, but surely if revenue are able to except this investment as just a holding of a group of stocks in one fund but not actually a "collective fund" then is this not a mechanism to prize open the whole taxation of funds and the exit tax regime for other "funds" , surely this could be a precedent to say that other investments are not funds but a collection of stocks as in this case
 
joe sod said:
That's good to know, but surely if revenue are able to except this investment as just a holding of a group of stocks in one fund but not actually a "collective fund" then is this not a mechanism to prize open the whole taxation of funds and the exit tax regime for other "funds" , surely this could be a precedent to say that other investments are not funds but a collection of stocks as in this case
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Hardly. EIIS investments are generally specific to an individual unlisted company or small ad-hoc groups of same. They're not remotely comparable to ETFs etc.

By the way, EIIS and similar investments are generally notorious for their high-risk nature - "friends, family and fools" tend to be their target market.
 
Steven Barrett said:
Tyre kickers. When it came down to it, people were humming and hawwing about didn't aspects of the investment. Some wanted to have greater control over the investment process, others didn't really know what they are actually doing.

I wasn't able to get past returns. The Davy fund is going a long time and they run it with BDO.
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if i recall BDO were big in the film investment space some time back also.
 
Blackrock1 said:
if i recall BDO were big in the film investment space some time back also.
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I used to do my film relief through Anglo. You could borrow off Anglo to invest in the scheme and pay them the interest once the relief came through. It was money for literally signing your name on a form.
 
Steven Barrett said:
I used to do my film relief through Anglo. You could borrow off Anglo to invest in the scheme and pay them the interest once the relief came through. It was money for literally signing your name on a form.
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yes i remember that, good times, although there were a few hairy ones were the loan took some time to be paid off.
 
silverfox239 said:
Deemed disposal regime not applicable to EIIS opportunities as effectively you are holding direct shares in a company. And just like shares when you sell for higher price you will have to pay tax. One interesting point is if you make a loss on EIIS shares you cannot offset it against other gains or carry the loss on your tax return.
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I believe Joe is asking what the tax situation is when you invest in the Davy/BDO fund, rather than individual EII companies.
 
They’re structured as partnerships and direct holdings so 41% fund tax or ETFs are of no relevance. The fund approach provides some diversification, but this is still very high risk stuff. Also, these funds have to give clients back their money if they can’t find suitable investments, with the clients then losing the tax relief that they were expecting. The cynic in me therefore concludes that, especially with one of the firms in question, as the year comes to a close and the clock ticks, they’re more likely to ‘reach’ and invest in two flies climbing a wall.

A wise man once said to me re EIIS/BES:

1) These are companies to whom everyone else has said “No”.

2) When you invest a hundred grand in one of these dogs’ dinners, get forty grand back in tax relief, and then lose the other sixty grand when these desperate fools to whom everyone else has said ‘No’ either run the business into the ground or steal your money, you’ve just lost sixty grand.
 
Steven Barrett said:
Tyre kickers. When it came down to it, people were humming and hawwing about didn't aspects of the investment. Some wanted to have greater control over the investment process, others didn't really know what they are actually doing.

I wasn't able to get past returns. The Davy fund is going a long time and they run it with BDO.
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Isn't there some on going issue regarding the paperwork each company needs to complete with the tax man, before you can get your tax rebate?

Open to correction but I recall hearing there were people waiting a long time for their rebate, which can be compounded when there are multiple companies involved in a fund?
 
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