Tax efficient ways of protecting your life, income, long-term savings, even the inheritance you leave your loved ones – Learn how to protect your wealth.
The dreaded invisible hand in the back of every earners pocket… Tax. Here is a list of ways to reduce your overall tax liability while achieving some financial goals:
Tax efficient long term savings
Did you know that on every pension contribution you make, you can get between 20% and 40% of that contribution back in the form of tax relief from Revenue. 100% of your contribution is still invested but it is only costing you 60% or 80% to make that investment. The investment that these contributions are going into grow tax free all the way up to your chosen retirement age.
In the case of the Self-Employed community out there, you can use these tax relief benefits to reduce your tax bill due to Revenue each year, if no tax bill then you can put this money back into your business or use it for a holiday the choice is yours.
What is your most important asset? Is it your Income?
If you were unfortunate to be struck down with a serious illness or injury and you were unable to work as you normally would in your chosen occupation, do you have a plan to replace this lost income all the way up to your chosen retirement age? Did you know that every premium paid for this type of income replacement policy like the pension above; you can receive between 20% and 40% of this premium back to you in the form of tax relief from Revenue.
In the case of Self Employed clients, you can use these tax relief benefits to reduce your tax bill each year, while insuring your income you earn every day.
Protecting Your Life
Personal Pension Term Assurance: This is a tax efficient Life cover plan for those of us in employment that does not have a pension scheme or offering attached. You can have more than a benefit of more than 4 times your Salary where the premiums you pay will receive tax back between 20% and 40% from Revenue. A smarter way of protecting you and your family.
The Self Employed clients out there can also avail of this offering and also use the tax relief as a way of reducing any tax bills due to Revenue.
Reducing your Family’s exposure to Inheritance Tax
Did you know that each person can gift another person €3,000 per year with no tax implication and no effect on your personal thresholds available under inheritance tax. This type of gifting is very valid where parents and grandparents want to share their accumulated wealth over their lifetime with their children and grandchildren. Gifting is for instance a great way of passing inheritance to your Children or Grandchildren. For example, upon death anything left to a Grandchild above €32,500 will be liable to inheritance tax of 33%. So, this is a helpful way to avoid that inheritance tax liability.
It’s always an excellent idea to develop a relationship with a financial advisor, as your life changes, the advice you need changes.
Alan Murtagh QFA LCOI BA – Director of Irish Insurance
Philip Keane CFP®, QFA, SIA, LIB, BBus (Acc/Fin)