Protection cover for cohabiting couples

Assets passing on death between married couples or civil partners are exempt from Inheritance Tax. BUT this only applies in the case of ‘legal spouses’ and same sex registered civil partners. All other couples are treated as strangers for Inheritance Tax purposes. The stranger threshold for Inheritance Tax is currently €15,075. Inheritances in excess of €15,075 are subject to tax at 33%.

Will you have to pay inheritance tax on the death of your partner? On the death of a non married partner Inheritance Tax will be payable on the total value of all assets, regardless of how long the couple have lived together. With the possible exception of the family home, where a ‘cohabiting partner’ inherits other property, or a death benefit under an insurance plan, the €15,075 threshold could easily be exceeded.

inheritence tax

If you think this affects you I would invite you to contact me with a view to reviewing your family and mortgage protection arrangements to ensure that you and your family receive the proceeds of your life assurance plan when you need it most in the most tax efficient way possible.

Summary of Finance Bill 2014 and impact on Pensions

ARF Imputed Distribution rate reduced

We welcome the reduction in the Imputed Distribution rate for ARFs and Vested-PRSA-ARFs (up to €2m) from 5% down to 4% between the ages of 60 and 70. The purpose of the change is to reduce the risk that ARF owners will outlive their retirement funds (by reducing the possibility of the fund running out). However, it is a pity that the age limit of 70 applies, and the Imputed Distribution Rate reverts back to 5% thereafter.

Withdrawals from AMRF now permitted but…

For the first time, new provisions will allow a maximum annual withdrawal of 4% (subject to taxation) from an AMRF (but not, it appears, from Vested-PRSAAMRFs). However, after 1 January 2015, it will NO LONGER be possible to withdraw income or gains made by an AMRF in excess of 4%, so AMRF-holders wishing to access fund growth from their AMRF in the near future should consider withdrawing these gains before 31 December 2014. Otherwise future withdrawals from the AMRF will be limited to 4% (under the current proposals).

Pension Levy is no more!

The good news for pension clients is that the Budget and Finance Bill has given certainty that the Pensions Levy will be ceasing after 2015 and customers have a “Green Light” to continue contributing to their pension and receive tax relief as before. Their pension continues to be the most tax-efficient way of saving for their retirement.