“Schools teach you how to work for money, but don’t teach how to make it work for you.” — Robert Kiyosaki

1. Spend less than you earn

This is a discipline. In order to achieve this goal, you have to know where your money is going each month. Everyone hates the word Budget but given that we all work so hard for our paycheck, taking a little bit of time to see where your money is going every month is worthwhile.

2. You don’t need a reason to save

Saving for a particular goal in mind is great in a predictable world, however, if the last 12 months have taught us anything life is not predictable. Saving is boring but having the protection and flexibility against uncertainty will definitely make it worthwhile. Pay yourself first. Put money aside before the rest of your bills are taken from your account.

3. You are your most valuable asset!

If you are anyway reliant on your income, you need to think about insuring it. Rent, Mortgage payments, food, broadband, etc, if you can’t get up and go to work, how will you continue to pay for these things, or even how would you continue to save for your next holiday/car/retirement?

4. Good Debt v’s Bad (crappy) Debt

Create a distinction between the two. Borrowing for your home is considered good debt, the expectation is that the value of your asset will rise as you pay off the loan thus increasing your net worth over time. Bad debt is generally unsecured debt, allowing you to buy something now and pay for it in the future. Credit card debt, overdrafts or personal loans can be difficult to get away from, but it is a downward spiral of wasted money.

5. Saving and Investing

what is the difference? Savings is short-term in nature – think of saving for that Holiday, next Car, home improvements? Do you need the money in less than 5 years – this is a good guide.

Investing is putting money away for future consumption, generally, in funds linked to stock markets (growth assets). You are hoping to increase the value of your money over time, at the very least beat Inflation. The core mandate for the bankers at the ECB is to use Interest rates to control Inflation. They have a target inflation rate of 2% per annum. This means that the purchasing power of your money over a 10-year period would decrease by 18%. (€10,000 would have the purchasing power of €8,200)

Mentally these things are very different, get your Savings in order so that you can Invest, as investing is what can grow your money.

6. Starting early is better than finishing strong

Compounding is like Magic! The more frequently your money earns interest, the faster and bigger your balance will grow. Setting up your retirement account when you start work may seem a ridiculous idea, but by putting small amounts away early, the hard work will be done when you are really starting to think about retirement.

7. Cash is not always king

Thinking that Cash is safe is the biggest mistake that I see people make. It is really difficult to beat inflation without some kind of investment strategy. The value of your money is being silently eroded over time. Have your Emergency/buffer fund and your savings in cash but no more.

8. Investing isn’t gambling when it is done right

Investing should be like watching paint dry; buying Bitcoin is not investing. By investing you are taking a level of risk with the aim of being rewarded for taking that risk. Your capital is not guaranteed. By Investing in a globally diversified fund, you are tapping into the ingenuity of the best companies in the world. This quote from British Financier James Goldsmith sums it up brilliantly “if you see a bandwagon, it’s too late’

9. Don’t neglect the basics

There are 2 big documents that you need to have – A WILL; we all hate talking about Death but unless you want your family to pay exorbitant legal fees and have a ton more paperwork, organize a Will this week. The second document is an Enduring Power of Attorney; this allows someone else to act on your behalf if you are temporarily unable to make your own decisions through illness or disability. It’s particularly important for health and financial decisions. Both documents can be organized by your Solicitor.

10. Money doesn’t give you happiness, but it can give you choices.

I have never met a client that regretted being financially secure. With a few simple steps, that can be you. Click here to request a call

The post 10 Things about Money You Weren’t Taught at School… appeared first on O’Leary Financial Planning.

You marry someone you can’t live without” – unknown

Ok so it’s not the most romantic reason for a proposal, but there are many financial and practical reasons to tie the knot. As well as the joy of sharing your life with the love of your life there are also financial benefits that include tax breaks and welfare benefits not necessarily available to cohabiting couples. Below are just some of the financial reasons to say “I do”.

Favourable Tax

Married couples can choose how they want to be taxed – joint assessment, separate assessment, or single assessment whichever produces the most favourable tax advantages given your personal circumstances. You can share tax credits if one person earns less than the other. You can be taxed as one unit and allowed some tax concessions not used by one spouse to be transferred to the other. The standard tax cut-off point is €51,000 for a married couple (€42,000 if you’re single/co-habiting).  If both partners are working you can earn up to €84,000. This means that one person can have a cut-off point of up to €51,000 and the other person can have a cut-off point of up to €33,000.

The increase in the standard rate band is not transferable between spouses, so the tax bands for 2024 would be:

• €51,000 @ 20% (= €10,200) and €4,000 @ 40% (= €1,600) for the first spouse
• €33,000 @ 20% (= €6,600) and €2,000 @ 40% (= €800) for the second spouse

Spouse has more rights when it comes to inheritance

Spouses’ don’t pay inheritance tax.

When a spouse dies, irrespective of a will or the deceased person’s wishes their spouse has a legal right to one-third of their estate. However the same can’t be said for co-habiting couples. Co-habiting couples have no automatic rights to a share in their partner’s estate. They must be named specifically in a will to inherit and may be liable for inheritance tax. A co-habiting partner is treated as a stranger for inheritance tax purposes and is liable for 33% tax on any inheritance over €16,250.00.

The payout from a life assurance policy to yourself or your spouse is tax-free, provided you or your spouse were the original beneficial owners.

Spouses can gift each other money with limited tax consequences. If you are married you can transfer gains between spouses and offset the losses of one against the profit of the other. This is not applicable to cohabiting couples.

Pension Benefits

Pension benefits can be transferred to spouses. If a person dies before retiring, their spouse is entitled to death-in-service benefits from the pension pot. If the spouse has already retired then a pension can be paid to the survivor depending on the particular scheme. Make sure you speak to your financial adviser. When it comes to pensions, those who are not married or in a civil partnership cannot guarantee access to their other half’s pension savings.

No Stamp Duty for Married Couples

Married couples don’t have to pay stamp duty when they transfer assets from one to another. They are not subject to capital gains tax either.

Self-employed – tax savings if you employ your spouse

If you are self-employed or run your own business you can reduce your tax bill by employing your spouse and share tax credits. If the company funds a pension for you and your spouse it can result in significant income tax savings for you and the company.

Capital losses made by one spouse can be used by the other spouse to reduce a capital gains tax bill.

Life is full of surprises and things can change in a heartbeat. The key is to anticipate those bumps in the road & be prepared for them. It is so important to discuss your finances with your partner & make important decisions together. Don’t wait until there is an issue to be addressed talk to us t put a plan in place, it doesn’t have to be elaborate, that way neither party is in the dark should something happen.

Don’t be left thinking… if only…

Click on the button below to Request a Call Back or arrange an appointment.

The post 5 financial reasons to say “I do”… appeared first on O’Leary Financial Planning.

It’s time to improve your overall financial knowledge

Get clear on your options. Taking the time to understand your current financial position will help you identify the challenges that you may face (both now and in the future). The sooner you identify these, the sooner you can remedy them and get back on track to financial independence.

Have a strategy

A ‘plan of action’ to follow so you know where you’re heading and how you will get there. It’s important to have clear goals and objectives to ensure you have some financial security in the future, the journey can and should be just as meaningful and fulfilling. Your financial journey cannot be geared solely towards your future financial stability, you have to also allow yourself to save for and enjoy life now. A prudent financial plan takes into account your needs for the future but also your needs right now… holidays, children’s school trips, changing the car, renovations to the house, etc.

Enjoy your life more

Life is is for living so enjoy your life more knowing that you have the cash flow to fund your lifestyle. Critical to maintaining positive cash flow is knowing & keeping track of your income sources and ensuring that they remain constant. It will determine the quality and standard of your lifestyle choices.  The key is to strike a balance between setting and working toward your goals and enjoying the present moment. Goals should enhance your life, not become a source of stress or unhappiness. It’s essential to set realistic and flexible goals that allow room for spontaneity and enjoying life as it comes too.

Take an interest in your finances again

Most people know deep down that they don’t give their finances the time and attention they deserve… When you finally make the decision to turn things around, you approach things with a renewed sense of energy. Financial planning is a tool to help you achieve financial freedom and peace of mind so that you can concentrate on what brings you joy and fulfilment. It’s not about being overly frugal or sacrificing all present enjoyment for a distant future goal but rather striking a balance between enjoying life today and securing your financial well-being for the future. The key is to create a plan that aligns with your values and allows you to have fun while making informed, responsible financial decisions.

Make smarter decisions around your money

Think more carefully about the way you spend & invest. One of the least painful ways to save and invest is to automate the amounts you want to set aside each month. With steady, ongoing contributions to retirement plans, recurring deposits into savings accounts, and smart investment decisions it’s possible to create your own safety net of financial security.

Contribute to a Retirement Savings Plan

How many of you do not have any personal provision for your retirement? How many of you are confident you will have sufficient income for when you retire? Does your company offer an employee pension scheme? If you haven’t already got a retirement plan in place now is the time. Your future is not guaranteed. There may be speed bumps ahead in your life, and you might encounter some money troubles, having a retirement plan will put you in the best place to deal with them. Start your retirement savings now, delaying your contributions means you’ll have to save more every month to end up in the same position.

Get the right Insurance

Financial security is something too many of us leave to chance! For some reason, most people don’t want to think about something going wrong or contemplate potential issues that may arise … Until it’s TOO LATE! Hope for the best, PLAN for the worst. Get the right advice for your situation.

‘Bulletproof’ confidence

Improve your financial wellbeing knowing that – no matter what life throws at you – you have a plan, money in reserve, and a ‘backup plan’ in place when it comes to money and finances. Financial security can be yours.

STRESS less!

When you are in control of your money, life just seems to get better. Things get easier. You have greater peace of mind and can replace worry with confidence. When you understand your finances, you take back control, and have greater financial CLARITY, CERTAINTY, AND CONFIDENCE because you have informed CHOICES!

…And finally, Make an Appointment with your FINANCIAL PLANNER at O’Leary Financial Planning. We can provide you with the best weapon for taking control – CHOICE! We’re here to ensure you make informed decisions about managing your money, stay focused on the prize, and achieve your financial ambitions.

Well worth the effort, wouldn’t you agree…?

The post 10 Reasons to Jump Start Your Financial Future… appeared first on O’Leary Financial Planning.

How do you view your business in the context of your overall financial goals?

You might find that relying on your business to fund your retirement restricts your options for the future… 

Building and maintaining a new business in the current climate is not an easy task, but it’s vital that you look after yourself and any family members who are helping you grow your business from the start. In addition to your insurance make sure you have the right protections in place, you’re availing of all relevant tax reliefs & you’re future proofing yourself regardless of what happens in your business. This will benefit the company and your personal finances in the long term.

Here we look at some useful financial tips for business owners to help improve your future financial security and …. maybe encourage you not to put all your eggs in your business’s basket.

Many small business owners are often too focused on growing and running their business to think about managing their own finances, particularly when it comes to their financial security. However, you could be benefiting from your business while it’s growing by availing of tax reliefs and building valuable service time to protect and benefit you and your family in the long run.

Look after yourself as well as your business

Separate your personal and business goals

Take the time to distinguish between your personal and business financial goals. It can be easy to put the business goals ahead of your personal goals when you’re running your own business.  It’s just as important to set out your personal financial goals and how you’re planning to achieve them such as funding your children’s education or your retirement.

Draw a Salary

All too often business owners don’t draw a salary from the business in the early years. Those who do usually do so ad-hoc – expenses, dividends, etc. It’s so important as a business owner that you draw PAYE earnings as soon as you can in order to create service for tax purposes. The number of years of service that you have is dictated by the number of years that you’ve had remuneration from a tax perspective. The more service you have accrued the better for you in the long run, in terms of your pension or a possible termination payment from the company. Make sure to pay yourself first. It’s a good habit to set aside money consistently as this provides a safety net for any unexpected expenses.

Protect your Income

Life is unpredictable and as a business owner/self-employed it can be even more so, especially in the early years. Income protection or serious illness cover is something you should consider especially if you have a family relying on your income. Income protection insurance pays out a regular cash payment that replaces part of your lost income if you can’t work due to a medium to long-term illness or disability.

Studies from Zurich and Irish Life show that in 2022 there were over twice as many claims for living benefits as for death. Cancer accounted for the majority of all income protection/serious illness claims.  The average age of serious illness claimants was between 51 and 53 years. Claimants of income protection were around 46 years of age. As a business owner/self-employed you may not be entitled to sick pay, but even if you are it may not be enough to meet your monthly expenses. This is something the company can pay for while availing of tax relief on premiums.  Make sure you’re availing of it.

Protect your Share of the Business

Businesses insure their premises and equipment against financial loss, but very often they overlook their key business assets, their people. Key staff represents the beating heart of every business, especially in a small, family business. While insurance can’t replace key personnel, it can provide cash to buy time, cover the costs of temporary staff, recruitment, loss of profits or provide a cash injection. Prolonged absence through serious illness or even death can be detrimental for some of these firms. The risks are the same whether it’s a limited company, partnership, or sole trader.

It’s vital that you have a shareholder agreement in place as well as adequate business protection to ensure you retain control of your business in the event of the death or serious illness of your business partner. It also helps to preserve the continuity and survival of your business. Having proper protective structures in place can help lessen the financial impact of such an event giving you a financial cushion to allow you to decide on what to do next.

Extract Value from your Business

So, how do you extract your share from a business in the most tax-efficient manner?

• A company can fund a pension scheme on behalf of its owners/ directors based on the level of income they are earning and claim tax relief on it which can be significant. It’s a great way to save tax-efficiently for retirement subject to certain rules.
• Retirement relief from capital gains tax can potentially reduce a business owner’s tax bill substantially when they dispose of their share of the business and they can still continue to work in the business if they wish.
• The third option to consider is possible termination payments such as severance pay, ex-gratia payments, redundancy, etc. The business can make a potential payment of up to €200,000 tax-free to any employee including its owners. This is very much subject to length of service, which is why it’s important to draw a salary from your business immediately.

Invest in your Future

Making contributions into a pension not only ensures you have a sufficient income when you retire, it also provides you with generous tax relief that you can’t get elsewhere, so you keep more of your hard earned income whilst growing your wealth. A salaried director of a limited company can avail of very attractive levels of pension funding with tax relief for themselves and the company. Your Pension should be an essential part of your financial plan. Both the tax relief and the long-term nature of a pension makes it one of the best retirement planning and wealth extraction tools available for Co-Directors and Business Owners today. Click here for more information on the benefits of setting up a retirement plan for yourself and your company

Employ your Spouse or a Family Member

Employing a spouse or family member is something we’ve spoken about consistently to business owners and self-employed clients. If your spouse or a family member is “helping out” with admin, marketing, accounts, etc unpaid, they’re not technically employed by the company, so they cannot avail of any benefits. Should the company become cash-rich, instead of taking out some of the profits put them into a pension.  You can’t do this if that person has no service record, i.e. doesn’t pay PAYE. If you have family members doing any work for the company set them up as a PAYE employee.

Building a new business is not an easy task. It’s vital that you look after yourself and any family members helping you grow your business from the start.  You can build their service record and avail of all tax reliefs at the same time. This will benefit the company and your personal finances in the long term.

This article is intended to provide general information and is not intended to be financial, tax, or legal advice. Every situation is different, and legislation can change. Before making any decisions, you should discuss your specific situation with your tax and legal advisors… and if you need help get in touch

The post Personal Financial Planning for Business Owners appeared first on O’Leary Financial Planning.

Here’s something to think about:

The most tax efficient way for a business owner to extract some of the wealth from their business into their own name is through a Pension. A salaried director of a limited company can avail of very attractive levels of pension funding with tax relief for themselves and the company, whilst a senior company executive has the option of paying into a Personal Retirement Savings Account (PRSA) with greater benefits, funding flexibility and tax relief.

If your business is profitable, you can extract much of that wealth from the company by making significant contributions to a PRSA for yourself and your family. You can extract this wealth for your spouse and/or any family member over the age of 18 who is employed by the company, regardless of their salary or length of service.

If you have already accessed your workplace pension, you may be able to further fund towards your retirement pot using a PRSA structure.

Since January 1st it looks like the old rule book has been thrown out. Make sure all funding is done with the blessing of your Tax Advisor.

Changes to the Finance Act 2022

Changes to the Finance Act 2022 that came into effect since 1^st January 2023 mean PRSAs have become a more attractive option for individuals, particularly company directors who may be drawing lower salaries and are not in an occupational pension scheme. The new PRSA option provides greater flexibility of funding, benefits, features, and investment choices, including:

• Improved funding limits* for employees and company directors, all employer contributions receive tax relief in the year they are paid
• Full PRSA fund is paid to employees’ estate should they die in service
• Company directors and Business owners who employ their spouse can provide enhanced pension funding for them whilst at the same time reducing the company’s tax bill
• Includes sole traders & partnerships
• Company directors who already accessed benefits but are still in employment
• Not subject to investment rules, trusteeship established by new legislation
• Client & advisor have more control
• PRSA at the centre of every retirement plan

*subject to Standard Fund Threshold

Why are the changes important?

• Since January 1, 2023 an Employer Contribution to a Personal Retirement Savings Account (PRSA) is no longer treated as a Benefit in Kind
• (a BIK is any non-cash benefit of monetary value that is provided by the employer to the employee and as such is treated as taxable income)
• for income tax purposes
• Employer Contributions to a PRSA are no longer restricted by age related limits
• Employee Contributions to PRSAs aren’t restricted by any Employer Contribution paid which was the case up to now. Employees can now contribute more and claim tax relief via PRSA
• There is no restriction on Employer PRSA Contributions in any way and it is not based on the employee’s salary or length of service
• Currently, tax relief on all employer PRSA contributions can be claimed in the accounting period in which it is paid
• Moving forward an Employer can make any Employer Contribution to a PRSA. The only limit being the overall Standard Fund Threshold of €2 Million. These benefits are taxed at a punitive tax rate of 71%
• An Employer can make an Unlimited Employer Contribution (linked to the employee/self-employed income) to a PRSA and claim tax relief in the accounting period in which its paid based on the current legislation
• It applies to Employees and 20% Directors. Applies to 20% Directors of Investment Companies, where the director is registered as an employee of that company and receives a salary under Schedule E
• Self Employed Person or Partnership can pay a Benefit in Kind Free Employer PRSA Contribution for an employee
• An Employer can contribute to a scheme and a PRSA at the same time, for the same employee
• An aspect of the PRSA which some directors may find attractive is the death benefit claim for an active member. PRSA funds can now be paid in full to the estate of the deceased member in the event of death. Occupational pension schemes place restrictions on the maximum allowable lump sum payable. The residual funds are used to provide a pension via an Annuity or to purchase an Approved Retirement Fund (ARF) for a spouse or dependents.

This is brand new ground for the Pensions Industry, so we are all grappling with the impact these new rules will have for customers but talk to us today to see how we can help you…  click here to book a chat.

The post Changes to the Finance Act 2022 that could greatly benefit your Retirement Plan appeared first on O’Leary Financial Planning.

Essentially, you have three options when leaving your employer:

Leave it where it is

You can decide to leave your pension where it is, definitely the easiest option for now, but not always the best. Imagine trying to track down an old employers scheme in 20/30 years’ time!!!  Also, when an employee leaves a company, their pension is generally left in a default pension fund. This can become a wasted opportunity for growth.

Before leaving the company take the opportunity to review your pension and get proper financial advice on the best option for you. If your old company offers impartial financial advice to their employees, then you should avail of this service before you leave the company… you may have to pay for it otherwise. If you do leave it where it is, make sure you have the contact details of the pension administrator, and keep all your pension scheme documentation together including payslips, pension benefit statements, booklets, etc.

The Pros & Cons

• Once you reach retirement you can access this pension the same as any other pension – take a tax-free lump sum; transfer the funds into an annuity or opt for an approved retirement fund.
• The Trustees of the scheme are not obligated to keep in contact with you
• Your Retirement options are subject to the scheme rules.
• Your investment could under-perform as bigger schemes have limited Investment options since they cater for large groups of employees
• When moving jobs, you might forget about the plan over time. Make sure your pension provider has a mobile number and personal email address for you. The trustees of the pension need to be able to track you down if they need to
• Passing away before retirement could complicate matters for your dependents.
• You may not have access to Financial Advice after you leave the company.
• Access to your pension is determined by your ex-employer.

Transfer it to your new company’s pension scheme

Once you’ve started in your new job you could transfer your existing benefits to your new employer’s pension scheme, if the scheme allows for it. Everything is consolidated under one scheme giving you control over your pension pot as well as keeping it in on place. It will be easier to work out your overall pension benefits and how much income you would expect in retirement.

The Pros & Cons

Transferring your pension benefits would require you to sell up existing assets in order to transfer them to the new fund. The main risk here is being out of the market for some time, and depending on market conditions, could mean you selling out at a lower price and buying at higher one. You also need to consider how your fund(s) are treated for your dependants on your untimely death.

However, it does means you’ve consolidated your pension and you don’t run the risk of forgetting about it over time.

Transfer it into a Personal Retirement Bond (Buy Out Bond)

You can transfer your pension benefits from your old company pension scheme into an individual pension bond set up in your own name.  You take control of your pension and can access it from aged 50. However, if you become seriously ill before the age of 50 you may be able to draw it down sooner.

It’s up to you when you want to take the benefits and it is independent of your other pensions. Depending on the original pension scheme you have a few options when you decide to take your benefits:

• You might take part of it as a lump sum
• You might be able to use the balance to buy an annuity or
• You might be able to transfer the balance to an ARF (Approved Retirement Fund)

The Pros & Cons

• You control how you want to invest your pension and the risk level you are comfortable with
• You can access your pension at 50
• You can transfer the full value of your PRB to another PRB or occupational pension scheme that’s approved by Revenue, however you may incur additional charges.

• Once you transfer a pension out of your previous employer’s pension scheme it cannot be reversed
• PRBs can be more expensive than leaving your pension in a large pension scheme where economies-of-scale exist
• You cannot make further payments to a PRB. It is a is a single premium account designed to accept a transfer from an occupational pension scheme.

What happens if you have more than one pension?

You’re coming up to retirement and you realise you might have a couple of pensions with previous employers going back 10 or 20 years… What should you do?

First things first… get advice!!!

If you are moving jobs or you’re nearing retirement and think you may have a few pensions from previous employers, then talk to a Financial Planner. They will advise you on how to move forward and the best option for your circumstances.

You should have received “Leaving service options” when you left your previous employer outlining your options in relation to your benefits under the scheme. It will set out when you joined the pension, when you left, and above all, the value of your pension (how much retirement money is at stake). If you can’t find your paperwork, contact the HR department of your old company and ask for a copy of your LSO letter. You can ask for an LSO letter at any time whether you’ve left your job last week or 10 years ago. They will be able to give you an up to date value of your pension.

Your pension is an asset for your future and your options need to be carefully considered. In today’s working environment, it’s normal for a person to have numerous pensions when they reach retirement from different employments. There are various pension transfer options available when you leave an employment, it’s important to understand your options and make an informed decision.  Decisions made now will affect your future financial situation.

So, take the time to work out what you want to do with this asset that can benefit you in the future. Don’t just leave it there.

https://www.pensionsauthority.ie/en/

The post Do you have a pension with a previous employer? appeared first on O’Leary Financial Planning.

Most of the differences between UK and Irish pensions have been harmonised. However, there are some areas in which one jurisdiction may be more beneficial to you than the other.  You may choose to transfer your UK pension to Ireland for convenience and administrative ease, however, before you make that decision it’s important to talk to a financial adviser first. Most UK private sector pensions may be transferred overseas but most public sector schemes may not.

Pros & Cons of transferring your pension to Ireland

• Transferring your UK pension to Ireland is certainly more convenient and easier to manage. You have access to local financial advisers who can advise you and help administer your fund, in euros.
• If you transfer your pension to Ireland, your transfer value is tested against the UK lifetime allowance of £1m. If your pension fund is higher than this, there may be an immediate exposure to UK tax. This would be deducted before the transfer is made.
• It also allows for a greater level of flexibility as to how and when you can access your pension.
• If you keep your pension in the UK, a paid-up Defined Benefit pension won’t provide a death benefit entitlement. It will only provide a pension for a dependent in the event of your premature death. If you transfer it to Ireland, the transfer value or value of the pension on the date of death is payable to your estate. Your pension won’t be liable to British inheritance tax.
• In Ireland, you can access 25% of your fund as tax-free cash up to a maximum of € 200,000-lifetime limit, per person. However, if your tax-free lump sum exceeds €200,000 then the excess will be taxed whereas it could be paid to you tax-free in Britain.
• If you have been living in the UK for the past 10 years prior to the current tax year, you may be liable for UK tax on your transfer payment to Ireland. If you withdraw from your Qualifying Recognised Overseas Pension Schemes (QROPS) within the first 5 years of the transfer, the transfer will be subject to British tax rules.
•  You can transfer most private-sector pensions but most public sector pensions cannot be transferred.

To avoid triggering a UK tax charge when you transfer your pension to Ireland, you:

• need to be a tax resident in Ireland for 10 years prior to accessing your pension benefits.
• must not require access to your benefits for 5 years after the transfer has been completed as funds have to remain in the Qualifying Recognised Overseas Pension Schemes (QROPS) for 5 years before retirement or a transfer payment can be made.
• intend on remaining a tax resident in Ireland for 5 years after you have accessed your benefits. For this reason, you should transfer your pension sooner rather than later!

To transfer a pension from the UK:

1. Advise your UK Pension Provider that you are considering transferring your UK pension to a Qualifying Recognised Overseas Pension Schemes (QROPS) in Ireland.  Inform them that you require the current transfer value and all the relevant discharge forms. Once completed, send them back to your financial adviser.
2. Once this information has been received by your financial adviser they will recommend the best course of action and guide you through the application process.
3. The application is then submitted to your chosen provider by your financial adviser on your behalf.
4. Once received, your policy will be converted into Euro and your new Irish policy will be set up.
5. If your UK pension is a defined benefit pension a UK financial adviser will need to be involved.

http://www.welfare.ie/en/Pages/Transfer-of-Private-Pensions-to-Ireland-for-returning-Irish-Emigrants.aspx

Retirement options once you’re transferred your UK Pension to Ireland

On retirement, you can take a 25% cash lump sum and with the balance (subject to Revenue rules) you can:

• Buy a guaranteed pension income for life (an annuity)
• Invest in an ARF /AMRF Fund
• Drawdown the entire fund as taxable cash
• Choose a combination of these options.

If you qualify for an ARF, the following is a breakdown of some of the reasons why you might transfer your UK pension to Ireland:

• Death Benefits – The tax process in Ireland is more favourable compared with the UK where death taxes can be up to 73%. You should seek tax advice relevant to your own inheritance circumstances to ensure you’re availing of all relevant tax reliefs
• Convenience – Easier to have your pension administered in Ireland when you live here. Provides for more flexible access to the fund. You can choose how and when you want to access your retirement fund
• Reduced Currency Risk – Reduces the risk of future volatility in currency rates on your pension with Brexit looming in the UK
• Once a transfer is made to an Irish approved product, clients can access their fund (25% Tax-Free with the balance invested into an AMRF/ARF/Annuity) once the individual:
• is age 55 or over
• has ceased being a UK tax resident for at least 10 UK tax years
• Your transferred fund will not be taken into account in the calculation of your ROI €2m standard fund inheritance

We strongly recommend getting impartial financial advice if you are thinking of transferring your UK pension to Ireland.

NB – Laws and tax rules may change in the future. Any changes to legislation or Revenue practice may result in some options not being available to you at retirement. Transferring a pension from the UK to Ireland may not be suitable for everyone. This will depend on individual circumstances, also not every UK Pension Scheme will permit such a transfer. We recommend that you get financial advice to discuss your options. Click here to request a call.

The Information herein is not advice and should not be relied upon to make investment decisions.  It is provided for general information purposes only. It does not fully take into account individual financial circumstances, investment needs, and objectives, attitude to risk, liquidity needs, capital security needs, capacity for loss, etc. The tax treatment contained herein is based on O’Leary Financial Planning’s understanding of current Revenue practice as at January 2019 and on the individual circumstances of each client.  This may be subject to change in the future.

The post Transferring your UK Pension to Ireland appeared first on O’Leary Financial Planning.

No matter what type of savings or investment account you have your money in chances are you’ll be liable for some level of tax on any gains made on your investment – Dirt; Stamp Duty; Capital Gains Tax; Exit Tax. Tax treatments on investments should be one of your key considerations when you are looking at your investment options. Whether you think of yourself as an Investor or just someone that has ‘a bit’ in the bank; some or all of these taxes may be relevant to you.   You might be an accidental ‘Investor’; maybe you received some free shares back in the day as a result of an Insurance company ‘demutualising’ or inherited a few FBD shares or you could fall into the category of a seasoned Investor.  Whatever your status; the taxman isn’t discerning; most forms of ‘Investments or Savings’ carry a tax liability on any gains.

At O’Leary Financial Planning, we always recommend speaking to a specialised tax adviser for bespoke advice however, we do know our way around the main aspects of the rules so we can certainly help find you the best investment option to meet your specific requirements. By talking to your adviser, you can educate yourself on the options that work for you and can reduce your tax liability.

Some of the main ways to reduce the tax you pay on savings and investments include:

• Using any allowances that may be available to reduce tax liability
• Using tax-advantaged investment structures – the most obvious being a pension
• Taking full advantage of your annual capital gains tax allowance
• Keeping a record of any losses on shares or property to offset against future capital gains.

Capital Gains Tax

This tax rate is 33%, however, everyone has an annual allowance of €1,270 which means; any gains that they may receive up to €1,270 are tax free. This is a handy allowance and shouldn’t be ignored. With CGT; you can offset previous losses against future gains; again, this can be very useful for anyone who may have incurred losses on property or assets in the past.

Returns

The Capital Gains Tax Self-Assessment System of Taxation applies to all individuals regardless of whether you are a PAYE earner or self-employed.

If you sell or otherwise dispose of an asset and owe Capital Gains Tax; it is payable under our self-assessment tax rules. This means the responsibility is yours to ensure that tax is paid on time and details of the disposal made in your tax return form to your Tax Inspector. If you do not comply with these rules you will have to pay interest and penalties to the Revenue in addition to the tax owed.

Timing – Tax Payment Dates

The tax due is payable on the following dates –

15 December – Each year for assets sold/disposed during the preceding 1 January to 30 November (Initial Period).

31 January – Each year for assets sold/disposed during the preceding December (Later Period).

As you can see from above dates you do not have much time between selling/disposing of an asset and having to pay the tax due on the gain.

Tax Return Date

In addition to paying the tax; Your tax return for the tax year in which an asset was sold must be sent to the Revenue by 31 October following the end of the tax year.

If you miss this date you will be charged a penalty along with the tax due. This applies even if you actually paid the tax on time but were late sending in your tax form.

EXIT Tax

This is the most straightforward taxation method; it’s a flat 41% tax on any gains within an Investment Bond; administered by the Provider. It does not discriminate; regardless of your personal tax position or any losses you incurred in previous investment bonds; this rate is levied on encashment or each 8^th year anniversary of the policy while it is in force. This does mean that your fund can grow without it being reduced by tax during this 8-year period.

HOWEVER corporate savings plans, or investments have a reduced liability of 25%!

Deposit Interest Retention Tax (DIRT)

This tax has been reducing over the last few successive budgets; now in 2019 it stands at 35%. Some would argue that with deposit rates so low; that this tax is vastly irrelevant to most of us as we are earning so little anyway. This Tax charge can make a difference if you are investing in a Capital Secure product that earns a return over the term; if you are lucky enough to be DIRT exempt; you can earn gains tax free.

Those exempt from DIRT include:

• Certain Individuals over 65s
• First time buyer
• Person with a physical or mental disability
• Non-resident
• Companies paying corporate tax
• Revenue approved pension schemes
• Charities

Don’t forget employees and those receiving occupational pensions and who earn over €5,000 in Investment income; may be liable to PRSI & USC on this income. Self-Employed including proprietary directors of small companies, pay PRSI on their gross deposit interest, dividends and rental income.

Remember An Post offer accounts earning a Dirt-free return; it might be worth taking a look.

Tracker Bonds and Structured Products

If you are considering an Investment in any Tracker Bond/Structured product; the various tax treatments under different products may be your deciding factor; are you DIRT exempt – well then, a Deposit Tracker Bond may be suitable? Do you have CGT losses accrued? Then a CGT product may be suitable. Are you a lower rate Income Tax payer; a product liable to Income Tax or else a high dividend paying portfolio may be considered?

Corporate Saving plans and Investment; rather than having large balances in your current account; why not consider putting this money to work AND avail of the reduced 25% tax on gains. By investing in a Regular Saver or Investment Bond you will not be liable to the close company surcharge (20%).

Tax is a significant consideration when deciding what to invest in as different types of investments carry different levels of tax. It’s important to be aware of all the facts when it comes to investments and think about what suits your needs and objectives in choosing the right portfolio for you.

O’Leary Financial Planning has significant experience in assisting individuals in determining what investment options are most suitable, and which investment vehicle is most appropriate. If you wish to discuss possible investment options, and the taxation considerations give us a call on 091 778677.

If you’ve any questions about saving or investment options click here to request a call

The post Tax Treatments on Investments – What you should consider appeared first on O’Leary Financial Planning.

Do you need to start saving a little bit more?

The first thing to do is record ALL your spending by writing it down in a notebook for one month. If you don’t fancy the ancient art of writing it down there are plenty of Budget Tracking Apps you can download to your smartphone that will do the same thing. It’s like keeping a food diary only you’re recording your spending habits. It will give you a better understanding of what you’re spending your money on and where you can afford to make some savings. For example, €2.80 on a cup of coffee over 5 mornings adds up to €14 per week. That’s over €670 annually. We’re not saying don’t have that cup of coffee. We’re saying be aware of how and where your money is going.  Maybe cut down, rather than cut out.

Our rule of thumb for effective budgeting and financial planning is 50/20/30.

Budgeting isn’t about limiting yourself, It’s about making the things that excite you possible. With that, the 50/20/30 rule is a good base from which to start:

• 50% of your income should be earmarked for essentials. These include your mortgage, utility bills, food, children’s education, medical insurance, income protection, etc
• 20% of your income should be earmarked for pension contributions & savings, including debt payments – credit card, rainy day fund, investments. Don’t forget the valuable tax relief that you will earn on your pension savings.
• 30% of your income should go on personal needs and enhancing your life, so things like entertainment, hobbies, interests, improving your home, etc.

Money management is about knowing what you have coming in, what you have going out, and developing a workable financial plan that allows you to say yes to the things that are important to you. It’s about knowing the best way to make your money work for you. It doesn’t matter how much money you have, everyone needs to have good money management skills.

“Earning a lot of money is not the key to prosperity, how you handle it is “

 – Dave Ramsey

The post You can’t manage what you don’t measure! appeared first on O’Leary Financial Planning.

We all need to keep sight of what’s important. The financial choices you make should be determined by what you value most – family, financial independence, security.

Regardless of where you are in life whether you’re single, married, divorced, or widowed money management should aspire to be one of your top priorities. There are some key financial steps you can take to ensure you meet your financial goals and improve your financial wellbeing.

Financial Planning for Women in Employment

Whether you are in full-time or part-time work, there are a few key steps to consider.

Are you in a Relationship/Married

Communication is key. Make financial decisions together, that way neither party is in the dark should something happen.

Are you Planning on Moving Jobs?

Don’t forget to transfer your pension contributions, update your insurance, and Opt into your new employer’s pension scheme.

Are you Expecting A Baby ?

Starting a family is a wonderful and exciting chapter in anyone’s life. Adjusting to a whole new lifestyle can be daunting. So, a little planning can go a long way towards
helping you remain in control of your money.

Are you Taking Care of Elderly Parents?

Understanding the costs and care needed is essential to preparing for upcoming expenses for aging parents.

Are you Planning to Retire? 

Will you have a sufficient income when you retire? Whether to have your own pension or are relying on your spouse’s pension make sure you know how much you are projected to get when you retire.

The post Financial Planning for Women Through Different Stages of Their Life appeared first on O’Leary Financial Planning.