Jill Kerby

MM writes from Dublin: I purchased a house in January 2006 as first time buyer exempt from stamp duty. I rented it out first in March 2008. What is the clawback in stamp duty? 

According to the Revenue, prior to December 5th, 2007, there was a five year period from the date of purchase in which you could not rent your home or you would face the clawback of a portion of the stamp duty, unless the rental period occurred in the third, fourth or fifth year of ownership. Clearly in your case, the property was rented out in the second year. In this case, you are liable to pay back the difference between the higher stamp duty rates and the duty paid and it becomes payable on the date that rent is first received from the property. In 2006 the first €317,500 of the property’s value was exempt and the balance, assuming it cost you more than €317,500, is subject to stamp duty clawback at 3% up to €381,000 or 6% up to €635,000 or 9% over €935,000. You don’t say how much you paid, but as a first time buyer, hopefully if will not have been much above the €317,500 threshold. For more information about stamp duty clawbacks see http://www.revenue.ie/en/tax/stamp-duty/leaflets/section-92b.html 

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AR writes from Dublin:  I was wondering whether I should either save €30,000 I have in an Anglo Irish fixed account at 3.8% interest for one year, or as I read in a recent Sunday Times Money page, An Post’s tax free three year fixed rate bonds at 10% or 3.25% a year?  The reason I am asking is that the interest rate might go up during next three years but my money would be already tied in for three years in the post office.    I would be grateful for your opinion. 

The Anglo Irish account is subject to an automatic annual DIRT deduction of 25%, reducing the net rate of interest to 2.85% after 12 months. Your €30,000 deposit will therefore be worth €30,855 after tax.  The post office savings bond after three years will be worth €33,000, but as you say, you must tie up your capital for three years. If you do not foresee a need to dip into your lump sum, the post office bonds are clearly better value, especially now that we are experiencing a deflationary period – your money is not being whittled away by price inflation. Both An Post and Anglo Irish Bank are state owned entities. Both An Post and Anglo Irish Bank are state owned entities, and therefore enjoy a permanent state backed guarantee but I think it fair to say that An Post has a far better reputation for trust than the disgraced Anglo Irish Bank.

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TB writes: I am (or was) a Waterford Wedgwood shareholder – the shares are now delisted. I assume that these shares can now be counted as a loss for CGT purposes for the tax year 200 but in the process of moving house I seem to have mislaid the documents. I contacted the share registrars (Capita) who told me I must contact the receiver.  I contacted the receiver who told me that they cannot provide details of shareholdings. I am now at a loss as how to proceed so as to determine the exact loss and get documentary proof for Revenue purposes. If you could provide assistance with this it would be much appreciated.

The Receiver, Deloitte & Touche, was extremely unhelpful initially, despite the fact that Capita, the share investor service in Dublin where the details of your shareholding were kept – confirmed that the Waterford share account material had all been turned over to the receiver.  Eventually Deloitte finally issued a terse statement:  “The Receiver was appointed over the assets and undertaking of the Company.  He has no authority over the shares of the Company.  It is a matter for the Company’s Directors.”  What this means, said a spokesman for the Director of Corporate Enforcement who I also spoke to on your behalf, is that you must contact that Waterford Wedgwood plc directors – in administration - directly and appeal to them to intercede on your behalf to get the replacement certificate.  Their office is at Hill House, Little New Street, London, EC4 A3TR, telephone 0044205 8427.  (I tried that number several times and was unable to make contact.) If that does not produce the certificate, your last option, said the Corporate Enforcement spokesman is to go to the High Court to enforce the articles of association under the 1963 Companies Act 1963 which states that you are legally entitled to a replacement share certificate.  The cost of this would be prohibitive so hopefully you can resolve this through the administrator’s office in London. 

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WP writes from Dublin: My wife and I are soon moving permanently to Spain where we have been semi-retired for a few years.  We were lucky enough to sell our house in Dublin last year for a very fair price.  We have three grandchildren, two of whom will be doing their leaving certificates next year and the other one in two years, who are already named as the beneficiaries of our will.  We have told their parents that we will pay for their third level fees if they are re-introduced, but someone told me that if we give them this kind of money before we die (we anticipate spending at least €10,000 a year on the first two grandchildren) it could affect how much tax they would have to pay when we are gone. Is this correct?  Is there any way we can get around this? 

What generous grandparents you are!  The tax-free inheritance threshold between a grandparent and grandchild was reduced from €54,254 to €43,400 in the April mini-budget and the capital acquisition tax on amounts over this sum is now 25%. However, you can give each child €3,000 every year without triggering any tax or even any need for them to declare the gift under Capital Acquisition Tax rules.  If you start making these gifts now, especially to the younger child, it should meet some, or all, of the annual college fee. If it is not sufficient, you could always give the balance to your son or daughter for the child’s use under the same €3,000 rule. The grandchildren can then still inherit from you and not face any extra tax liability than that which will apply at the time on a bequest from a grandparent to grandchild. 

The Sunday Times 

MoneyQs – Sept 6

By Jill Kerby 

OO’S writes from Dublin: I will be made redundant shortly and the company pays VHI for me and my husband, Plan B Excess. The company will immediately cease paying the VHI, so that leaves me with a decision to make as to what health insurance company is best for us. I am in my mid fifties and my husband is in his late fifties. What company and health plan do you think is most suitable for us?

I passed your query onto Dermot Goode, a fee-based broker who specialises in health insurance (see healthinsurancesavings.ie). He suggests that the Quinn Health Care equivalent to your Plan B Excess, which costs €752 per adult is Essential Plus Excess, which costs €642 per annum. Given that your family income has been drastically reduced, you might also consider Quinn’s Essential Plus Starter at €499 p/a “which covers all public and most private hospitals,  andwhich might be suitable if your reader wants to reduce her cover temporarily until she finds alternative employment.”  Switching back up to a higher benefits plan later may result in restricted benefits if either of you develop a medical condition that would then be subject to an exemption period under a higher plan.  Make sure you understand all the possible consequences before you sign up to any new plan. 

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TC writes fromDublin:  Several people have told me that as a British subject living in Ireland for many years, both before and since my retirement, though I never worked here, that I can transfer my UK state pension to Ireland and be paid Irish state pension rates, which are a lot more generous! My Irish wife has a UK pension from her marriage to me, but it seems she can apply for a non-contributory Irish pension when she is 66. She has too few PRSI contributions to qualify otherwise. I am not sure it can happen but no harm in asking and trying to get a bit more to live on!

As the UK is covered by EU Bilateral Social Security Agreements, your UK state pension rights are protected when you move to Ireland and your pension can be paid to you in Ireland by the UK Department for Work and Pensions (DWP). If you have not already physically transferred your pension you can do so by consulting the DWPs International Pensions Centre at the Department for Work and Pensions, Tyneview Park, Newcastle Upon Tyne, NE98 1BA, England or call 0044 191 218 7777. They also have a website you can consult: www.thepensionservice.gov.uk . As for just switching benefits from the UK to Irish state pension system, I’m afraid you have been misinformed. There is a provision for people who have made social security contributions during their working lives in more than one country to qualify for a combined pension from these countries, which could be paid to them by the Irish Department of Social and Family Affairs if they end up residing here. To qualify for such a pension you would have to be employed in Ireland for some time throughout your working life; since you were never employed here, this arrangement would not apply to you. However, a spokesperson for the Department told me that both you and your spouse can apply for an Irish State Pension (Non-Contributory) which is a means tested scheme payable at age 66 to residents of Ireland. Your UK pension and any other income or savings, and that of your spouse will be taken into account, but if your UK state pension in your only income, because it is of lower value than the Irish non-contributory pension which is a maximum of €219 per week, you may have some entitlement to a payment.

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EAM writes from Dublin: I recently made a loan to my son who is living in the UK. The arrangement is that he will repay £250 per month. He is with Nat West and my account is with AIB. Can you tell me the simplest and most cost effective method for him to arrange repayments?

Your son should first consult his UK bank as to the cost – for both the transfer and the exchange rate conversion (if it is done at that end) and the time it would take to do an electronic transfer to your AIB account. You would think this would be the simplest thing to do since all you need are the respective banks’ addresses, account numbers, IBAN codes, BIC/ SWIFT codes (which your banks can furnish), and it is, but such a transfer is not necessarily the cheapest. The smaller the sum, often the bigger the charge, and your son should check out the cost of the transfer from other money transfer agents, such as Western Union or some of the othersthat advertise on the internet.  Check them out carefully – aside from the security issue, some only transfer sums of at least £1,000 or more. Finally, do either of you have a PayPal account, which is very easy to set up (see www.paypal.com)?  Anyone who uses e-Bay, for example, is recommended to set up such an account from which secure payments are made via credit cards but I’ve used my PayPal account for many other transactions. This might be the simple and cheap solution you are both seeking. 

JC writes from Dublin: My parents are elderly pensioners and are selling a house that has been in my father’s name since it was left to him in the 1950's (He built it with his dad). The house was left to him with the stipulation that his mother would live in it for the duration of her life. She passed away in 2003. This house is, of course, not my parents "principal residence" and has remained unoccupied since 1998, when my grandmother went into a nursing home. The simple question is, are my parents liable for full CGT on the proceeds? 

“There is CGT relief available where a dependent relative is living in a property that is in your name under the circumstances that your reader describes,” says tax advisor Sandra Gannon of TAB Taxation Services in Dublin. “The house must have been provided free of rent or any other consideration," says Gannon. The calculation of the amount of CGT your father will have to pay is complicated however:  it depends on the date he took over the title, the years your grandmother occupied the house, the fact that CGT was only introduced in 1974, the date from which the house should be valued; that your father’s CGT liability will be calculated based on his unencumbered ownership from 1998, but mitigated by all of the above.  A tax advisor, or your father’s tax inspector should be able to assist him with this calculation. Since April 9th, 2009 the CGT rate has increased to 25%, but your father can offset any expenses involved in the sale of the property against the tax as well as his personal capital gains tax annual allowance of €1,270.

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JD writes: We are in the process of purchasing a house that requires a lot of work. The architect informs us the project may take up to one year to complete. Are we obliged to pay CGT on our current property that we will sell as soon as we are able to move?

Your principal private residence is not liable to any capital gains tax when it is sold and in this case, it remains your PPR until you move out and into your new one. However, if you change your mind, and decide once your new home is ready that you’d prefer not to see your original house and you either rent it out or leave it vacant, you would then have to pay a proportionate amount of CGT, relative to the amount of time involved – when your original property is eventually sold.  For future reference, the first 12 months of your ownership of the new house is usually exempt from any CGT liability if it is being refurbished.  This means that you are unlikely to be liable to any CGT for this period when it was still a second residence if you decide to ever sell it.   

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LK writes from Glasnevin:  Please could you answer a question that I'm sure many of your readers, especially Permanent TSB customers, may find interesting. Could you explain the relationship between the euribor and mortgage rates. In 2007 I looked for a business mortgage and was quoted the euribor three month rate + 1%. At that stage euribor was tipping 5%. Given this offer I presume banks use euribor as a basis for some loans. As mortgage rates were increased a few weeks ago I checked to find that the three month euribor rate is just under 1%, the 12 month rate is 1.38%. Both figures give a bank charging a standard variable rate of 2.69% a margin of at least 1.3%. If the euribor represents the rate at which banks can get funding at then where is the justification for a rate rise? Has euribor become as irrelevant as the ECB rate? I would be grateful for your expert view.

The euribor is the rate of interest at which banks borrow funds from other banks in the EU interbank market. It varies daily but it used to operate at a small margin above the official ECB rate. Time was when these rates were all in close alignment, such as when tracker mortgages were established: they were based on a set margin above the official ECB rate, reflecting the lender's confidence that the ECB rate would be almost identical to the euribor rate.  But no longer. When the credit crisis hit, banks pulled back dramatically on their lending - even to each other, charging exorbitant rates and shortening the length of the loans. Recently, euribor rates have come into closer alignment with the ECB but the amount of money that can be borrowed by different institutions means that the rate is no longer as influential in setting mortgage rates as it used to be and the banks say they must rely on a mixture of  retail deposits, corporate deposits, inter bank borrowing (often at a margin above the euribor), the bond market and the ECB itself  to fund mortgage lending.  The banks argue that the average rate they pay is now higher than the euribor, hence their reluctance to advance loans tied to a rate that is costing them money, like trackers.  The PTSB say the traditional link between ECB, the  euribor and mortgage rates is now gone and is unlikely to be restored

JC writes from Dublin: My parents are elderly pensioners and are selling a house that has been in my father’s name since it was left to him in the 1950's (He built it with his dad). The house was left to him with the stipulation that his mother would live in it for the duration of her life. She passed away in 2003. This house is, of course, not my parents "principal residence" & has remained unoccupied since 1998, when my Grandmother went into a nursing home. The simple question is, are my parents liable for full CGT on the proceeds? 

“There is CGT relief available where a dependent relative is living in a property that is in your name under the circumstances that your reader describes,” says tax advisor Sandra Gannon of TAB Taxation Services in Dublin. “The house must have been provided free of rent or any other consideration and in this case, what CGT does apply is payable from when the house fell vacant, in this case 1998,” says Gannon. The calculation of the amount of CGT your father will have to pay is complicated:  it depends on when your father received title, the fact that CGT was only introduced in 1974 and the fact that your grandmother’s period of occupancy was be exempt in determining the value of the CGT that applies between 1974 and when the property is actually sold.  Your parents will need to get a valuation of the house back in 1974, and then work out how much of the gain is exempt based on her years of occupancy.  A tax advisor, or your father’s tax inspector should be able to assist. Since April 9th, 2009 the CGT rate has increased to 25%, but your father can offset any expenses involved in the sale of the property against the tax as well as his personal capital gains tax annual allowance of €1,270.

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The period mother left in it it is treated as PPR and he can claim relief until mother left – calculate gain from 98 value in Apirl 6 1974 to 09 when CGT was intro – she lived for 25 year  74 to 09 but actual years of wonership is the period that is discounted

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CR writes from Limerick:  I read in Aine Coffey's Sunday Times article last week that Halifax might pull out of the Irish market. We have a mortgage & some personal savings with Halifax. What will happen to these accounts if Halifax withdraw from the market? Will the mortgage be sold on? If so, we have a tracker mortgage, will we keep the terms & conditions of the tracker mortgage? Will we be able to access our personal savings?

This is all the realm of speculation, but if Halifax or any other bank were to pull out of the Irish market, my understanding is that they would be obliged to honour all existing lending contracts, but do so by providing their customers with on-line or telephone/postal services with which to either access their savings or repay their loans.  It would undoubtedly make requests for information or problem solving less convenient than being able to speak to a branch official directly – no one enjoys the tiresome automatic redirection facilities of home-grown, let along foreign based financial call-centres.  But such an arrangement, a la Northern Rock Ireland and the Leeds and Nationwide building societies, which all take deposits from Irish customers this way, would certainly allow the Halifax to remain here as a deposit taker if they so wished.  Of course they could also just sell their loan and deposit book to a rival UK or Irish bank.  Again, existing lending contracts would need to be honoured, but savings terms, (once fixed rate periods expired) would undoubtedly revert to whatever offers were available from the new institution. 

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DP writes from Dublin: We recently gave birth to our first child and have received many gifts of cash and cheques for him but have been unable to decide on the best option for a bank account for him. Can you please advise as to the best savings account currently available for children either a post office or bank account. I am sure over the coming years he will receive more gifts of cash and I also want an account with which we can teach him the value of saving as he grows older. 

There are plenty of branded children’s savings accounts available – all the main Irish banks and building societies offer them, so does the on-line bank, RaboDirect, though the interest payable on some child-specific accounts can be very low. Some provide moneyboxes and membership certificates, but these are suitable for older children so perhaps you should concentrate on achieving a good return for the lump sum right now and on any regular savings. Top paying demand, internet and notice accounts at the moment are available from the Halifax (3.75%), AIB (3.25%) and Permanent TSB (3.5%) respectively. Anglo Irish Bank offers 3.8% for a 12 month fixed rate and the EBS 3.75% for five months while the best regular savings return are available from Anglo Irish Bank and Bank of Ireland at 5% and the EBS at 4.5%. Deposit rates are expected to come down so you might want to fix your rate.  Make sure you check out post office savings certificate and savings bonds for longer term, tax free savings returns, currently paying 21% over five years and six months and 10% over three years respectively.  Many parents find the local post office a very convenient place for their children to open their first account. 

PH writes from Dublin: I have been self employed in the construction industry for the past three years paying PRSI class S. Due to the downturn in construction I am now without work.  I have been informed by my social welfare office that the only benefit I can apply for is means tested, but I don’t think I would qualify as my wife earns around €600 per week. Nor do I qualify for any FAS training course or any training scheme because I am not in receipt of unemployment benefit. My accountant informs me that there is an allowance which is not means tested for persons who paid PRSI Class S. Is this correct?   What is my best course of action?

Class S PRSI applies to self-employed people including certain company directors, people in business on their own account and people with income from investments and rents.  The only benefits you are entitled to under this category are a State Pension (from age 66), a widow and widower's contributory pension, a guardian’s contributory payment, maternity benefit (if you are a woman), adoptive benefit and a bereavement grant. I have no idea what allowance your accountant is referring to, but you are correct that any social welfare payments that a community welfare officer could sanction would be means tested on a euro for euro basis against your total household income, which of course includes the bulk of your wife’s earnings. Self-employment has many attractions, but not during a severe economic downturn and for many construction workers, they had little choice in becoming sole traders because so many building companies refused to hire full-time, pensionable employees.  Unfortunately, even those who did, were not always compliant in making employer PRSI contributions, pension contributions or even in passing on their employees’ own pension contributions. Your options are quite limited and your main hope (along with a lot of your colleagues) is to find work in your field or find PAYE employment in a PRSI category that provide you with a better safety net than PRSI category S. You can download leaflet SW 106 from the Department of Social and Community Affairs website (www.welfare.ie); it defines the different PRSI categories and accruing benefits. 

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MW writes from Dublin:  I refer to your query from SL of Limerick in last Sunday’s edition. The query related to capital gains tax on profit made from selling your home after having let it for a period of years. Could you tell me if the same applies in the UK?  I have a property there that I lived in for over 15 years before moving back to Ireland for family reasons five years ago.  In order to buy a house here I will have to sell the property in the UK and wonder if I will have to pay CGT?

While you will not have to pay Capital Gains Tax on the five years in which your UK property was not your principal private residence - this is because you made a “distinct break” from the UK and were no longer a tax resident - you will be liable for Irish Capital Gains Tax of 25% on that portion of the proceeds that correspond to your five years residency here. Also, you would have been liable for both UK and Irish income tax on any rent you would have earned from the UK property, but the dual taxation agreement in place between the two countries means that you would only pay the tax in one jurisdiction and receive a tax credit from the other. The UK Inland Revenue has produced helpful guidance notes and booklets which defines residency, ordinary residency and domicile – see http://www.hmrc.gov.uk/CNR/ and a Q&A guide about CGT liability for non-residents: http://www.hmrc.gov.uk/cnr/faqs_capgains.htm 

PP writes from Dublin: Some time ago you gave the address of who would supply information about converting pension funds into PRSAs, the above, but I have forgotten it.   I contacted Irish Life re information on buying an annuity, and they suggested I should contact an independent broker.    

A good pensions advisor should be able to explain the merits of transferring a qualifying occupational, defined contribution pension fund and/or AVC into a PRSA if you are over 50 and especially if you have been made redundant.  This is because the pension income produced from the pension annuity you would be obliged to purchase if you encashed your pension could reduce any means-tested Jobseeker’s Benefit you might be entitled to if you have not secured work after your 12 months of Jobseeker’s Allowance runs out.  There is no cost involved in transferring a pension fund to a standard PRSA, but there is a charge (typically 1% of the fund) in arranging for the required actuarial certificate. Pension consultant Michael Leahy, the former CEO of Standard Life (michael_leahy@globalpensionoptions.com ) is the actuary whose company, Global Pension Options provides this service to individuals and to the pension providers who accept such transfers. 

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NP writes from Dublin: I have a question relating to the purchase of a Section 23 apartment. My late brother purchased one in 2006 for €260,000. He died in 2007 having used some of the allowances against other rental income. As he had not held the apartment for 10 years a claw back was paid to Revenue. I am thinking about buying the apartment for €115,000 in line with falling property prices but am unable to get a satisfactory answer regarding the amount of rental relief I would be entitled to, offset against other rental income. My accountant says the rental relief should be the new price, €115,000. Revenue say it is based on a formula which, is the property cost multiplied by the development cost plus the site cost. I don’t know yet what the site and the development cost are. If Revenue are correct it would hardly be worthwhile to make the purchase as the rental relief would be very small, €40,000 or less.  Revenue’s answer would seem unfair as the site cost and the development cost would be much less today than they were in 2006 when the property was first purchased. Like my brother, I intend to offset the rental relief against other rental income. 

According to tax advisor Sandra Gannon of TAB Taxation Services in Dublin, the Revenue should allow you the full amount of tax relief that was available to your brother when he bought the property despite the fact that your purchase price would produce a much smaller tax relief amount.  The Revenue’s website, www.revenue.ie  allows you to download a booklet, A Guide to Section 23 relief – Rented Residential Relief in a Tax Incentive Area, which outlines how to calculate your tax relief.  It gives an example – see Section 6.2, Example 2 -  of how the original Section 23 property is sold for a lower price to a new buyer and how the new buyer, because their tax relief works out at lower amount because the purchase price is lower than the original purchase price, is still entitled to claim the higher relief that applied to the original buyer.   Either you or your accountant should be able to confirm the amount of tax relief you will be entitled to from this example. 

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LL writes from Dublin: In regard to the bank guarantee, is Ulster Bank fully covered by the Irish government in their branches in the republic? 

I became unemployed in May. My mortgage is quite new. I applied for mortgage interest supplement to assist with the interest portion of my mortgage and Ulster Bank had to send a copy of my mortgage application to the community welfare officer. The manager in my local branch sent this request through the internal bank post, but it has been delayed. Without the mortgage supplement it is difficult for me to repay my mortgage and I feel that my only option is to cease paying the mortgage payment, until I receive the requested documents. I know this appears to put me in the wrong but I can't see any other option. I would be grateful for your advice.

First, Ulster Bank’s deposits are covered by the £50,000 bank deposit scheme operated by the Financial Services Authority in the UK. It does not come under the Irish government 100% guarantee scheme. As for the problem you are having in getting the bank to release the documents that you local community welfare officer needs before he can assess whether you are entitled to mortgage interest supplement, I suggest you contact the dedicated MoneySense officer in your branch about your difficulties, if you haven’t already done so. MoneySense is a new personal finance guidance programme that UlsterBank introduced last May for its customers to use on-line, in print and face-to-face in all their 227 branches. Dealing with unexpected situations like losing a job, divorce or illness is one of the specific functions of the new service in order that customers don’t arbitrarily stop making mortgage or other loan payments. According to Richard Donnan, Managing Director of Personal Banking at Ulster Bank, “In recent months, reports of job losses and the resulting financial pressure on customers has intensified. We want to give people the practical support they may need at this time to help them take control of their finances.”  Let me know how you get on.

JSL writes from Limerick: Is it true that if someone rents out their home for any length of time, they are liable for Capital Gains Tax (at 37%) when they sell? A friend, after reading the letter last week regarding the claw back of stamp duty said “That's OK but she hasn't told him that he'll have to pay CGT.” Surely this can't be true!

Normally you do not pay Capital Gains Tax on any profit you make by selling your principal private residence (PPR).  However, if you were to rent it out for any period of time, then the CGT exemption will be restricted. However, the Revenue does allow some leeway. For example, the last 12 months of ownership is regarded by them as a period of occupation; also, any period of absence working abroad, or any period of absence, not exceeding four years, during which you couldn’t live in your residence because of employment you’ve taken up somewhere else in Ireland, provided you occupied your property before and after the period of absence. A clear cut case of having to pay CGT on the sale proceeds would occur, for example, if you decided to rent out your PPR and move into another property you own, or even into private accommodation as a tenant.  Some people do this because the rent they receive for their PPR is greater than their outgoings on the other property. In either cases, once the original property is sold, the owner will have to pay a proportionate amount of CGT on any profit from the sale, based on the number of years in which it was rented out.  Finally, the capital gains tax rate is 25%, not 37%. 

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PB writes from Dublin: I'm hoping you can give me some information re. means testing of Jobseekers Allowance. I was made redundant last year and I'm currently not working. I'm debt free and received what I consider to be a reasonable redundancy package after more than 20 years working for the company. Obviously I'm seeking working currently, my question is, if in the coming months I don't succeed in getting a job and end up applying for Jobseekers Allowance do I have any options re. investing my redundancy of almost €100K, (in a pension plan, etc.) so that its not taken into account for means-test purposes.

Means testing applies to anyone who goes off Jobseeker’s Benefit after 12 months and applies for the Jobseekers Allowance. There are a number of conditions you must meet to qualify for Jobseekers Allowance (JA) and the means test calculation is very complicated, but there is a download available on the government’s www.citizensinformation.ie website.  Briefly, your total household income (including that of a spouse) plus interest on your lump sum or any other savings or investments, will be taken into account as ‘means’ to determine the size of your JA. If you were to invest your lump sum in a personal retirement savings account (PRSA) you could avoid it being included in the means test formula.  Speak to a financial advisor about this option. You don’t say whether you have a spouse, but if you do, her income would also be taken into account for means testing. That calculation deducts €20 per day, up to a maximum of €60, from her assessable earnings for each day she works including Sundays.  Next, 60% of the balance of her income is taken into account and this amount must be multiplied by €60 to establish the annual income that is taken as means in assessing your eligibility to the JA.  Since the annual Jobseekers Allowance for an individual is just €10,608, if her income exceeds this amount, after being deducted on a euro for euro basis, you may find that you do not qualify for any allowance. 

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TB writes from Sutton: In January 2009 Anglo Irish bank was nationalised. The Government, at that time, advised that an independent assessor would be appointed to value the Anglo shares. To date no assessor has been appointed nor is there any indication when this will take place. As a shareholder I am of the opinion that the shares are valueless. I would appreciate your opinion on if and when one would be in a position to claim a loss for Capital gains purposes, and therefore set the loss off against a current or future capital loss.

No official assessment of these shares has happened and I think you are being realistic in your view that your shares are now worthless.  In the light, the Section 538 of the Taxes Consolidation Act 1997 notes that where an asset, like your shares, now have a negligible value, “and the facts support the claim” and the circumstances suggest that the loss of value is permanent, the asset can then be deemed to have been disposed of at that “negligible value”.  (This also applies in the case of a receivership or liquidation, where there is little prospect of recovery in the value of the shares).  In such a case – and Anglo Irish Bank’s nationalization might fall into this category of permanent loss and negligible value – you should be able to claim the loss against any capital gains tax that you may be liable for in the year in which the loss has arisen. I suggest you confirm this with a tax advisor or your inspector of taxes. 

PP writes from Cavan: Your article in last week’s Sunday Times re endowment mortgages has left me worried. We have cleared our mortgage but kept on the savings part which we pay monthly. My question is this, does our endowment mortgage, which matures in 2013 become liable for CGT?  Also is the surrender value if we availed of it also liable for CGT?

Your endowment policy will be subject to an exit tax of 26%, the standard income tax rate of 20% plus an additional 6% surcharge.  The same exit tax rate will apply if you surrender the policy early.  Capital gains tax does not apply in the case of life assurance based investment policies, however, from August 1st year your policy will be subject to an additional 1% premium levy. The earlier article to which you refer referred to the higher tax treatment of matured or encashed endowment policies that were purchased in the UK and kept by their owner even after returning to this tax jurisdiction, not those purchased here. 

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OS writes from Dublin: I have been reading your articles on pensions over the past while. I am 55 and returned to work about 12 years ago, so my pension is not as large as I would like it to be. Worse still it has lost €12,000 since August of 2008. I am also about to take voluntary redundancy in September, despite being out on ill health grounds at present. I find the whole area of pensions confusing. I have been paying into the company pension scheme for the past 12 years, including an AVC. What is the very maximum that I can withdraw from my pension fund on a tax free basis, as I need to pay off part of my mortgage. What happens to the rest of the pension fund, my contributions, the AVC and the company contribution? Considering my age, what is the best option? 

Redundancy over the age of 50 allows a person access to their occupational pension fund before the usual retirement age of 65 (or 60 for some pension schemes).  You are also entitled to take the equivalent of one and half times your final salary as a tax-free lump sum from your portion of the pension fund/AVC and the remaining value of the pension must then be used to buy a pension annuity, from which you will receive an income for life. (Emergency measures introduced a few months ago by the government allows you to delay buying the annuity until the middle of 2010.) However, you also have other options.  There isn’t enough space here to describe them all so I suggest you engage a good, fee-based advisor to take you through them before your September deadline.  If, as it sounds, you are a member of a defined contribution (DC) scheme, one option you should ask the advisor about is whether it is in your interest to transfer out of the company occupational scheme and AVC and into a personal retirement savings account (PRSA) and PRSA/AVC. According to actuary Michael Leahy of Global Pension Options, a Dublin pension consultancy, a PRSA combined with a PRSA/AVC allows you to take 25% of the fund tax free, but no obligation to buy an annuity with the remainder.  This is an important distinction because pension income derived from the annuity can result in the loss, on a euro for euro basis, of the means-tested Jobseeker’s Allowance (JA) and other social welfare benefits, like rent or mortgage supplement if you qualify for such assistance, once your initial 12 months of Jobseeker’s Benefit runs out.  If your pension and AVC has been transferred to a PRSA instead, you don’t have to take income from the remainder of the PRSA once you take the tax free lump sum. By age 75 an annuity must be purchased with the remaining value of the PRSA, but not before then.  The decision is yours whether and when to draw down any income from the PRSA.  Also, if you die prematurely, the residue from your PRSA fund goes to your estate for disbursement whereas an annuity reverts to the provider, not to your heirs.  An independent pension consultant is the ideal person to speak to, but you can also contact the Pensions Board, www.pensionsboard.ie , tel 01-613 1900 for more information about your options.

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CD writes from Cork:  I recently heard you on a radio programme speaking about the possibility of Inflation becoming a factor in Ireland over the next few years. I have built up sizeable savings over the last few years [thanks to the advice of my parents when I was very young] and would like to look into possibly diversifying the savings into some possible inflationary proof areas. You spoke on the same programme about investing in gold, specifically in Perth, Australia? Can you please let me know the details of this and how I might be able to make contact?

There are a number of ways to buy gold – as coins or bullion from Irish or UK bullion dealers; as Perth Mint Certificates from the Western Australia Mint in Perth, as exchange traded funds (ETFs) that track the daily price of gold or a collection of as gold mining companies or by buying individual mining shares or gold share managed funds (see www.rabodirect.ie). Each carries its own cost and charges and investment risks. Physical gold carries a substantial premium these days, a delivery and insurance charge (depending on the provider) and annual storage charges that can amount to 0.75% of the value of the gold. Gold ETFs including one on the ISEQ (see www.ise. ie)are relatively low cost and involve the stockbroker transaction commission and a low annual fund fee, usually 0.5% or less and are are easily traded like a single share. The Perth Mint certificates, which are also sold by the Irish bullion dealers Goldcore.ie mean that you buy gold (allocated or non-allocated) from the Australia mint where the gold is kept at no additional annual cost or fee.  The purchase price is based on the daily price quoted by the Perth Mint plus a 2%-4% commission, depending on the amount you buy. There is an encashment fee, typically 1% for minimum purchase amounts of $10,000.

MC writes from Limerick.    I have €11,000 remaining in a Bonus Interest Account with Permanent TSB, the result of an SSIA.   It is no longer earning interest in this account and I would be grateful if you could advise what account would be best to lodge it with a view to leaving it there safely.  Also I took out a policy with the Permanent TSB in 1996 which is now worth €4,000 less than I put in.   This was with a view to providing education for my children.   The bank has now informed me that they can give me no information on this account as it is Hibernian Aviva who hold the account.   My monthly repayments are €150.   The current value of policy is approximately €9,000 approx.  Any suggestions for this money? 

The collapse of stock markets in 2008 and the first quarter of this year has been a major blow to everyone from parents saving for their children’s education, like you, to your parent’s and their hopes for a comfortable retirement. Of your two sums of cash, the €11,000 is by far the easier to sort out:  the best yielding demand deposit accounts is from Halifax with a 3.75% gross yield. If you are willing to leave your money on 35 day notice, your existing bank, the PTSB offers 3.5% gross. If you are willing to fix your term for at least six months you can achieve a 5% return, but I believe you would be taking a risk leaving any money with Anglo Irish Bank, despite the government’s 100% guarantee of deposits – there are some genuinely solvent banks still operating in this country, they just don’t happen to be Irish ones.  As for the €9,000 in your Hibernian investment the chances of you making up these losses in the near future don’t look very good.  The March to May rally in equity markets appears to be reversing and there is very little good news on the horizon for companies or consumers.  If you need to draw down this money anytime soon for the children’s education, there is no point in leaving it in an investment fund with high annual charges, fees and commissions that must be paid regardless of fund performance.  A safe deposit fund is the obvious option if you don’t want to take any more capital risk, even after the 25% DIRT on the interest.  I do not suggest you purchase any of the latest “tracker bonds” that track (and cap the returns) from different stock market movements and guarantee your capital back over a period – usually four or six years.  These are expensive and non-transparent.  You would probably be just as well off buying €1,000 worth of a solid blue chip stock - say Shell or BP or even Tesco, and the remaining €10,000 on deposit for four or six years.  

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DMcG writes from Wexford: Briefly, I bought my house in November 2007. It was a new build and I bought as an owner-occupier and paid no Stamp Duty. As a result of the economic climate I need to go to London to find work and I want to rent my house while I am gone. My solicitor said if I did this I would be liable for stamp duty on the house as it would be classed as an investment, which was never my intention. I need to rent it to cover some of the mortgage and if I am liable for stamp duty, which I was told I would have to pay up front, then there is no point in renting. My question is, am I liable to pay the stamp duty and if so how much, and do I have to pay up front? I fully intend to come back to live in the house. I paid €220k. I would appreciate any help you can give.

Your solicitor is correct. As a first time buyer you were entitled to stamp duty relief, but it is subject to clawback provisions.  According to the Revenue, prior to December 5th, 2007, there was a five year period from the date of purchase in which you could not rent your home or face the clawback of a portion of the stamp duty. The exception was to avail of the Rent-a-Room scheme. This five year exclusion period was reduced to just two years if the property was purchased after December 5th, 2007. But even if the property was purchased before this date – as yours was - no stamp duty clawback would apply if was rented out in the third, fourth or fifth years of ownership.  If you can manage not to rent out your property for another year and a half, that is, once you have owned it for three years, you won’t be liable to any clawback of the stamp duty relief you currently enjoy.  However, if you must proceed with renting out your home, the November 2007 rates will apply.  In your case, the first €125,000 of value is exempt and the balance - €95,000 – will be liable at 7%, or €6,650 and will be payable from the day you receive the first rental payment. For more information about Section 92B stamp duty relief and clawbacks see http://www.revenue.ie/en/tax/stamp-duty/leaflets/section-92b.html 

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RB writes from Delgany: I transferred to Quinn HealthCare when they acquired Bupa Ireland’s clients in 2007.My understanding was that Quinn would honour the terms and conditions which existed under Bupa membership. I had a 10% existing group discount which applied during the first year under Quinn, but it disappeared last year. I queried this and was told that Quinn were just responding to government recommendations. Only later did I discover that Vhi continues to give group discounts. Can you throw any light on this?

Quinn Healthcare maintained a price freeze for 2007, the year after it took over Bupa Ireland but from January 2008 it abolished group discounts and introduced a 3% surcharge for instalment payments. This change attracted a lot less attention than I imagined it would at the time – probably because Quinn Healthcare rates were quite a bit lower than conquerable VHI rates, but consumers are increasingly conscious of the escalating cost of health insurance this year, and will be even more so when the full effect of the €260 and €53 surcharges for every adult and child member are implemented by Quinn and Hibernian and are paid over by the government to the VHI.  If you haven’t already done so, you should review your health insurance to make sure you are both in the appropriate plan and are not over-paying for your cover. You can do this yourself by checking out the Health Insurance Authority comparison charts are www.hia.ie or engage a fee-based advisor (see www.healthinsurancesavings.ie).

MM writes from Dublin: We were unfortunate enough to have one of those dastardly endowment mortgages when we bought our first home in the late 80's.When we moved back to Ireland we got an ordinary mortgage but kept up the endowment savings plan part of the old mortgage as the redemption value was so poor.  Now that plan has come to its end and we have received its poor return and used it to pay off our mortgage. Is there any tax implication from the money that came in from the plan? 

Unfortunately, offshore investments taken out before September 20th, 1993 are subject to a 40% capital gains tax rate, and neither indexation or your annual CGT annual exemption apply, says the Revenue. (From January 1, 2001, such policies gains are treated as income “provided details of the disposal were correctly included in a person's tax return. Otherwise a charge to capital gains tax arises.”  You might want to consult a tax advisor about the size of your gain, and if there was a taxable charge in the UK, whether your Irish tax can be mitigated by the double taxation agreement with the UK. 

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GM writes from Dublin: I have had a tracker mortgage with Ulster Bank since mid-2004. More than a year ago, my employer changed my pay day and instead of getting paid at the end of the month, I now get paid on the sixth of every month. However, Ulster Bank refused to change the day my monthly payment is due and insists it can only take the mortgage from my current account on the first day of every month. Because there is no money in the account on that day my the mortgage goes into arrears and as a result, I have been receiving a letter every month from Ulster Bank imposing an “unpaid outwards charge” of €12.70. I arranged with my local Ulster Bank branch in December to set up a separate current account so that I would have money for my mortgage payment but, despite several phone calls Ulster Bank didn’t start taking money from this account until May. Each time I receive a letter from Ulster Bank House Mortgages, I ring and ask for a manager and explain my problem. Each time they insist they cannot change the direct debit date. Why won’t they accommodate me?

Ulster Bank told me that the terms and conditions attaching to your mortgage state clearly that mortgage repayments must come out of your (and every other mortgage-holders’) account on the first of the month.  There can be “no flexibility to change this date”. Customers like you who need a different repayment date are advised, as you were, to open a second current account to feed the original account from which the mortgage payment is taken. If you avail of free banking there is no additional charge, says the bank.  Whatever about that charge, you have been penalised several times by the bank for missing your repayment by a few days, and I think you should not only demand a refund for these €12.70 penalties but that you also insist that your credit rating, which has been negatively affected at the Irish Credit Agency, be urgently restored by the bank on your behalf.  Ulster Bank suggests you speak to one of their new MoneySense officials at your branch, but if this still doesn’t sort out your problem I suggest you file an official written complaint with the customer services manager and then, if necessary, with the Financial Ombudsman. Spokespersons for AIB, NIB (and Bank of Ireland) told me they accommodate their mortgage customers who need to set new repayment dates, though the instructions need to be done in writing, with five working days notice. Ulster Bank needs to follow suit. 

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KM writes from Portmarnock: I read your article on identify theft with interest. I once owned Eircom shares, which morphed and shrunk into near worthless Vodafone shares. I received a cheque by post annually. Now Vodafone has decreed one must have dividends paid into one's bank, or building society. The company has requested that I - and presumably other Vodafone shareholders - supply account details, otherwise they will hold the money. I do not supply such details to anyone and I pay bills by cash, or cheque. So, is Vodafone in breach of any data protection rules and have I any redress? In addition, is Vodafone entitled to hold onto someone else's money?

This proposal from Vodaphone to pay your dividend into a nominated bank or building society account cannot happen unless the amendments to the Articles of Association are approved at the company’s AGM on July 28th.  Once approved it will be perfectly lawful for the company to adopt this new payment method and you will be within your rights to decline to participate, but under the new articles, says Vodaphone, “your dividends will be held for you as a non-interest bearing deposit until you send us your completed Direct Credit instructions.”  You do have another option – to have your dividends reinvested in the company’s Dividend Reinvestment Plan (“DRIP”) from February 2010, the date after which one or the other option must have been selected by Vodaphone shareholders. The biggest long term gains from shares are made by re-investing the dividends; since you prefer not to provide any bank details, this might also be your best option. A pdf file of the Vodaphone proposal is available here: http://www.vodafone.com/etc/medialib/agm_09.Par.93293.File.dat/shareholder_letter.pdf