Tax Breaks - Special Savings and Investment Accounts.

Tax Breaks - Savings & Investments

There are a number of tax efficient saving schemes available in Ireland, summarised in the following table.

Please note these are not the savings accounts where the government adds cash to your savings; please click here for details of that scheme.

**NB Phase Out 2000-2002**

The Finance Act 2000 provided that there could be no further investment into SISs after 31 December 2000.

The Finance Bill 2002 has confirmed that the schemes listed below are being phased out, and are now subject to the same tax rate as regular savings.

**NB Phase Out 2003**

The Finance Bill 2003 has brought in a new provision to enable loss making SIS's (as a result of the worldwide equity falls) at termination to be offset against the taxable gains within the SIS in the previous 3 years.

Saving Schemes
Scheme	Investment Limit	Tax Rate	Investment Limit	Tax Rate	Notes
Scheme	from 6 April 1999		1998/99		Notes
Special Savings Accounts (SSA)	Ł75,000** per person	20%	Ł50,000 per person	20%	Note 1
Special Investment (Portfolio) Accounts (SIA)	Ł75,000** per person	20%	Ł75,000 per person	10%	Note 2
** Equivalent to €95,230.

Note 1: Special Savings Accounts (SSA's).

The amount which can be invested in an SSA is €95,230 (€190,460 if married) from 6/4/1999.

Your maximum saving could be:
Estimate of interest earned	€95,230 x 5%* = €4,762
Tax at marginal 42% rate for 2002:	€4,762 x 42% = €2,000
Tax at special 20% rate:	€4,762 x 20% = €952
Saving:	€1,048 (Ł825)
* Assume you earn interest of 5% in the tax period 2002 and invest the maximum.

Note 2: Special Investment Accounts (SIA's).

An SIA is a fund in which the money is invested in shares and various financial instruments.
55% of an SIA fund must be invested in Irish companies.
SIA's offer a potentially higher rate of return than SSA's, especially with the new era of lower interest rates. Shop around the stockbrokers and banks to find the investment that best suits you.
Let's look at the saving on a fund with an annual return of, say, 8%:

Your maximum saving could be:
Estimate of annual income	€95,230 x 8% = €7,618
Tax at marginal 42% rate:	€7,618 x 42% = €3,200
Tax at special 20% rate:	€7,618 x 20% = €1,524
Saving:	€1,676/Ł1,320

The maximum limit of €95,230/Ł75,000 is per person, so if you are married you can invest up to €190,461/Ł150,000 with your partner. You hold the bond jointly.
Please note that the €95,230/€190,461 limit includes amounts invested in any other SSA or SIA - you cannot take out several different SSA's and SIA's and invest the limits in each one.
The market value of an SIA cannot exceed €95,230/€190,461 at any time on or after the fifth anniversary of the setting up of the account. The value of each account will only have to be reduced to the maximum limit of €95,230/€190,461 on the fifth anniversary and every five years thereafter. This will mean SIAs will have to dispose of assets to meet the restriction.