Blog – David McCarthy – Galway Talks, 13/03/2014

galway-bayfmQuestion With the increase in DIRT Tax in the last Budget to 41%, is there any other way I can invest my money so that I pay a lower tax rate on any gains I make?

Answer:   Yes is the answer to your question.  This year has seen a number of what are known as “Soft Capital Protection” investments come on the market.  These are investments which have a large element of Capital Guarantee but do not have full protection.  As a result they are subject to Capital Gains Tax at 33% as opposed to DIRT at 41%.  In addition, the first €1270 of a gain in each tax year under CGT, is exempt.

In addition, you can offset past losses against future gains if they are subject to CGT.  This could be of considerable benefit for people who have lost monies on property or shares.

For somebody willing to take a limited level of risk, this type of investment has considerable attractions.

Issue:  Financial institutions refund Payment Protection Insurance premiums.

Comment:  The Central Bank recently announced the result of a review into Payment Protection Insurance Policies sold by financial institutions.  Approximately 77,000 customers are being refunded €67m.  Apparently 6,000 individuals have not responded to correspondence they have received in relation to a refund and it is important that they do so immediately.  I am unaware of the criteria that the Central Bank used with these institutions to determine which policies were missold.  But it is clear that it must have been far more limited than in the UK, as only 20% of all the policies sold here are due a refund.

Issue:  AIB launch new Tracker Mortgage similar to Permanent TSB.

Comment:  It was announced last week that Permanent TSB have introduced a new Tracker Mortgage that will allow existing customers to keep their current interest rate but also allow them to trade up or down in relation to their family home.  AIB have now introduced a similar product, which is a welcome move and hopefully other institutions will follow soon.