Are mortgage write downs and debt forgiveness subject to 33% tax?

At the end of last month, the Association of Chartered Certified Accountants (ACCA) warned that mortgage write-offs and debt forgiveness taking place under the Mortgage Arrears Resolution Process (MARP) could be treated as a taxable gift under Capital Acquisitions Tax (CAT) rules and therefore subject to 33% tax. In legislation the definition of a taxable gift includes “the release, forfeiture, surrender or abandonment of any debt”. The ACCA had particular concerns over this due to the fact that debt write offs which will take place under the new Personal Insolvency Act (as opposed to under MARP), have been specifically stated by government as not being subject to CAT. The ACCA asked Revenue to clarify the position regarding debt write offs which take place under MARP.

A Revenue spokeswoman responded shortly thereafter to advise that they would not deem mortgage write downs to be taxable provided that Revenue are assured of the “bona fides of particular arrangements”, i.e. that the debt forgiveness scheme is legitimate and undertaken purely for commercial reasons.    

Revenue have clarified their position in e-Brief No. 12/13 issued on Tuesday (2^nd April), which reads:

Section 5 of the Capital Acquisitions Tax Consolidation Act 2003 provides that a person is deemed to take a gift where, under or in consequence of any disposition, that person becomes beneficially entitled in possession, otherwise than on a death, to any benefit otherwise than for full consideration in money or money’s worth paid by such person.

By virtue of the definition of "disposition" in section 2 (1) CATCA 2003 the release, forfeiture, surrender or abandonment of any debt or benefit, or the failure to exercise a right may be subject to CAT in certain situations.

Where for bona fide commercial reasons, a financial institution enters into a debt restructuring, forgiveness or write-off arrangement with a customer, Revenue’s approach, subject to being satisfied as to the bona fides of the arrangement (which may be subject to Revenue audit or enquiry) is that the financial institution is not intent on making a gift of any sort to the mortgagor/debtor – and accordingly the mortgagor/debtor would not be subject to a CAT charge in respect of any such debt restructuring, forgiveness or write-off arrangement.

This approach will only apply in the above-mentioned circumstances. In particular, should any debt restructuring, forgiveness or write-off arrangement be undertaken for the purposes of the avoidance of tax, the treatment outlined above would not apply.

In summary therefore, so long as Revenue are happy that the debt forgiveness is legitimate and a bona fide commercial transaction, no tax liability will arise.

Contact Details:

www.fenero.ie

01-6877400

info@fenero.ie

Review of Budget 2013 Announcements

So the speculation is over and the announcements have been made. For a round up of all the main announcements made in today’s Budget, read on….

TAXATION MEASURES

INCOME TAX CHANGES

-          Universal Social Charge (USC)

Currently reduced rates of USC apply to the over 70s and full medical card holders. From 1 January 2013 the standard USC rates will apply to both the over 70s and full medical card holders earning more than €60,000 per annum.

-          PRSI

The minimum annual PRSI contribution for the self-employed is increasing from €253 to €500.

The weekly PRSI allowance for PAYE employees is to be removed. Currently the first €127 of weekly pay for a PAYE employee earning more than €18,305 is exempt from PRSI. This relief is to be abolished in a move that will cost PAYE employees earning over €18,305 an extra €264 per annum.

PRSI to be payable on passive income e.g. rental and other investment income.

-          Maternity Benefit

Maternity Benefit is to become a taxable source of income with effect from 1 July 2013.

-          Top Slicing Relief

Top Slicing Relief will no longer be available, from 1 January 2013, on ex-gratia lump sums in respect of termination and severance payments where the non-statutory element is €200,000 or over.

-          Charitable Donations

A number of changes to the administrative regime of tax relief for donations to charities and approved bodies have been announced. One new blended tax rate for relief on charitable donations of 31% to be introduced.

-          Benefit in Kind

The specified interest rate used in calculating benefit in kind on preferential loans (other than home loans) is to increase from 12.5% to 13.5%. However the specified rate of 5% for home loans is to be reduced to 4%.

-          Film Relief

The current film relief scheme is to be extended to 2020. However the scheme will be removed and will move to a tax credit model from 2016.

CORPORATION TAX       

-          3 Year Corporation Tax Exemption

An extension to the 3 year corporation tax exemption for new start-up companies is to occur. The relief is being extended to allow any unused relief arising from insufficient profits during the first 3 years trading to be carried forward for use in future years. However the maximum allowable relief cannot exceed the eligible amount of Employers PRSI in the year claimed.

-          R&D (Research and Development) Tax Credit

The amount of qualifying expenditure which can benefit from the tax credit without reference to the 2003 threshold is being increased from €100,000 to €200,000.

-          Close Company Surcharge

Close Companies are currently exempt from the surcharge where the amount of any undistributed investment income is less than €635. This threshold is being increased to €2,000. The majority of Irish companies are Close Companies. A Close Company is a company that is controlled by five or fewer participators or is controlled by any number of participators who are directors.

VAT

-          VAT rate for the tourism sector

The 9% VAT rate for the tourism (and certain other) industries is to be retained.

-          Threshold for accounting for VAT on a cash receipts basis

Businesses with an annual turnover of €1 million or less are currently eligible to account for VAT on a cash receipts basis. This threshold is to be increased to €1.25 million. Accounting for VAT on a cash receipts basis is a significant cash flow advantage for businesses.

PENSIONS

-          Access to pension fund pre-retirement age

Individuals will be allowed a once-off option to withdraw up to 30% of the value of their AVCs prior to retirement. However any withdrawals will be liable to tax at the individual’s marginal rate. This option will remain in place for three years after the passing of Finance Bill 2013.

-          Changes to maximum tax relief on pension contributions

The government plans to introduce a cap on tax relief for pension contributions into pension funds which will provide annual pension income of more than €60,000.

-          Pension Levy

The annual Pension Levy of 0.6% of pension funds levied to fund the Jobs Initiative is set to end as planned in 2014.

CAPITAL GAINS TAX

The current rate of 30% is to be increased to 33% and will apply to disposals made after 5 December 2012.

Relief to capital gains tax will be available for farm restructuring. This will be available where the proceeds of the sale of a farm are reinvested for the same purpose.

CAPITAL ACQUISITIONS TAX

The current rate of 30% is to be increased to 33% and will apply to gifts and inheritances received after 5 December 2012. The current group tax free thresholds are also being reduced by 10% with effect from the same date.

DIRT (TAX ON SAVINGS)

The rate of DIRT is to be increased from 30% to 33% for savings products which pay interest annually or more frequently. For products which pay interest less frequently than annually the applicable rate will be 36%. These increased rates will apply from 1 January 2013.

LOCAL PROPERTY TAX

The new local property tax will take effect from 1 July 2013. A half-year payment will be charged in 2013.

The tax will be charged at a rate of 0.18% on properties valued at less than €1 million and at a rate of 0.25% will apply to any excess value over €1 million. Importantly these rates will be known as the “central rates” but from 2015 onwards, local authorities will be able to vary the rate of the tax by up to +/- 15%. Therefore different rates will apply depending on the local authority that you live under.

The Household Charge will cease with effect from 1 January 2013 as this local property tax is to replace it. In addition the NPPR (non principal private residence) charge will cease with effect from 1 January 2014. Any unpaid Household Charge or NPPR taxes will remain as a charge on the related property however.

For full details on the local property tax, see our separate blog article at: http://smallbusinessadviceireland.blogspot.ie/2012/12/overview-of-new-local-property-tax.html

VEHICLES

-          VRT

Vehicle Registration Tax (VRT) rates are to be increased with effect from 1 January 2013. VRT reliefs currently in place for electric vehicles and certain hybrid vehicles are to be retained until the end of 2013.

-          Motor Tax

Motor tax rates will increase from 1 January 2013 across all categories although the rate for electric cars is being reduced to €120.

A full list of current and the new revised motor tax and VRT rates is available from page 2 onwards at: http://budget.gov.ie/Budgets/2013/Documents/Annex%20C%20-%20VRT%20and%20Motor%20Tax.pdf

EXCISE DUTIES

-          Alcohol

Excise duty on a pint of beer and cider, and on a standard measure of spirits, is being increased by 10 cent. The excise duty on a 75cl bottle of wine is to be increased by 1 euro. Pro-rata increases take effect on other products. These increases take effect from midnight 5^th December 2012.

-          Tobacco

Excise duty on a packet of cigarettes is to be increased by 10 cent with a pro-rata increase on other products. Excise duty on roll-your-own tobacco will increase by 50 cent per 25g pouch with effect from midnight 5^th December 2012.

SOCIAL WELFARE AND EXPENDITURE MEASURES

-          Statutory Redundancy Payments

The partial refund of statutory redundancy payments to employers, which was substantially reduced last year, is to be abolished completely.

-          Health

The prescription charge for medical card holders to be increased from 50c to €1.50 per item and the monthly cap for a family is being increased from €10 to €19.50.

Drug Payment Scheme threshold is being increased from €132 to €144 per month.

Medical cards to be replaced by GP only cards for persons aged over 70 with a weekly income of €600-€700 for single persons and €1,200-€1,400 for a couple.

-          Social Welfare Changes

No change to core weekly payment rates.

Child Benefit to be reduced by €10 per month.

The length of time which an individual can claim Jobseeker’s Benefit will be reduced by 3 months, from 12 months to 9 months. After 9 months a means test will be required.

Telephone and electricity allowances which are currently available under the Household Benefits package are to be reduced.

-          Education

For third level students, the student contribution to fees will be increased by €250 for the years 2013 to 2015.

Disclaimer: The above list is not an exhaustive list of proposed changes. In addition, the above notes are based on the budget speech and not on draft legislation, which will not be available until the Finance Bill is published. Fenero accepts no responsibility for any action which any individual or business may take or not take based on their reading of this article. Professional advice should be taken before any action is taken.

Contact Details:

www.fenero.ie

01-6877400

info@fenero.ie

The Self-Employed and Jobseeker's Benefit/Allowance

One issue that we are commonly asked about is that of social welfare entitlements for the self-employed, in particular JobSeekers Benefit. If you are self-employed, what social welfare safety nets are there should your business fail or not provide you with sufficient income?

Qualifying for Jobseeker’s Benefit

Most self-employed people cannot qualify for Jobseeker’s Benefit due to the fact that it is only given to people who have paid PSRI at Class A. However, if you have previously worked and paid Class A PRSI as an employee before becoming self-employed you may be entitled to Jobseeker’s Benefit.

To qualify for Jobseeker’s Benefit you need:

·         At least 104 Class A PRSI contributions paid since you first started work

·         And have 39 Class A PRSI contributions paid or credited in the relevant tax year (a minimum of 13 weeks must be paid contributions*) or

·         Have 26 Class A PRSI contributions paid in the relevant tax year and 26 weeks Class A PRSI paid in the tax year immediately before the relevant tax year.

The relevant tax year is the second last complete tax year before the year in which your claim is made. So, for claims made in 2012, the relevant tax year is 2010.

If you are unsure as to how many Class A PRSI contributions that you have, you can check your PRSI record directly with the Department of Social Protection (contact details available at www.welfare.ie).

I do not qualify for Jobseeker’s Benefit. What happens next?

If you do not qualify for Jobseeker’s Benefit you may instead qualify for Jobseeker’s Allowance which is a means-tested social welfare payment. If you have applied for Jobseeker’s Benefit and did not qualify, you should be automatically assessed for Jobseeker’s Allowance. In fact, you cannot actually apply for Jobseeker’s Allowance until you have first applied for Jobseeker’s Benefit (even if you know that you will not qualify for Jobseeker’s Benefit).

Jobseekers Allowance – Means Test

If you do not earn enough from self-employment and you do not qualify for Jobseeker’s Benefit, you may be able to get Jobseeker’s Allowance if you pass a means test. To qualify, you must also be:

·         Over 18 and under 66

·         Unemployed and available for, capable of and genuinely seeking work

·         Habitually resident in Ireland

How can I be available for work if I am self-employed?

You will no doubt have noticed that one of the qualifying criteria is that you must be available for and seeking work. For the self-employed, you can remain so and can even be engaged in self-employment every day and still be entitled to receive Jobseeker’s Allowance, provided your overall income stays below a certain amount. The number of days you are engaged in self-employment is not relevant.

In order to satisfy the criteria of being capable of, available for, and genuinely seeking work, you must be able to show evidence of this to the Department of Social Protection.

Available for work

Essentially the Department of Social Protection considers that you are available for employment if you are prepared to accept any offers of suitable employment immediately. It is important to be aware that you can be regarded as not being available for work and therefore not entitled to Jobseeker's Allowance if you put unreasonable restrictions on the following:

·         The nature of the employment

·         The hours of work

·         The rate of pay

·         The duration of the employment

·         The location of the employment

Genuinely looking for work

You must be able to show that you are making genuine efforts to secure employment. You need to provide examples of such steps. Steps which would indicate that you are considered to be genuinely seeking work may include:

·         Making oral or written applications for work

·         Looking for information on the availability of employment from employers, advertisements and employment agencies

·         Taking up reasonable training opportunities

·         Acting on the advice given by a Job Facilitator, a FÁS adviser or other placement agency such as the Local Employment Service (LES)

·         Taking positive, well advised steps towards establishing yourself in self-employment such as researching possible areas of self-employment,

·         Preparing business plans for a self-employment project

·         Attending relevant "start your own business" courses or seeking information, advice or guidance in relation to any of these steps

How is the Means Test Carried Out?

For information on how the means test is carried out, watch out for a future blog post coming soon.

Other Benefits

If you qualify for Jobseeker's Allowance you may also be eligible to apply for secondary benefits such as a medical card, rent supplement, mortgage interest supplement, fuel allowance, assistance with school costs etc.

Contact Details

www.fenero.ie

info@fenero.ie

01-6877400

Single parents – Earn an extra €8,250 free of income tax with the one-parent family tax credit

If you are a single parent, you are entitled to claim an extra tax credit known as the One-Parent Family Tax Credit. The one-parent family tax credit is worth €1,650 in 2012. This will allow you to earn an extra €8,250 free of income tax. (Unfortunately it will not reduce the amount of PRSI or USC that you pay as all tax credits only impact on your income tax liability).

Who qualifies for the one-parent family tax credit?

The one-parent family tax credit can be claimed if you are a single parent and you have a child, under the age of 18, who is dependent on you and resides with you for at least one night in the year.

In addition to children aged 18 or under, you can also receive this for a child over the age of 18 who is in full time education or undergoing a full time training course for a trade or profession for a minimum of two years.

You can also receive this tax credit if you are a single parent to a child who is permanently physically or mentally incapacitated and has become so before reaching 21 years of age, or has become permanently incapacitated after reaching 21 but whilst in full time education.

You do not qualify for one-parent family tax credit if:

•    You are a person qualifying for the married person's tax credit or

•    You are a person living together with another person as man and wife

Note that if you are claiming this tax credit and at a later date move in with a partner, you are no longer entitled to this credit and must inform Revenue.

And the tax savings get better....

If you claim the one-parent family tax credit, you will also receive an increase in your standard rate band. This means that the amount you are allowed to earn at the 20% tax rate will increase. As a single person you are entitled to earn up to €32,800 at 20%. When you claim the one-parent family tax credit, as well as receiving the tax credit your 20% tax band will increase from €32,800 to €36,800. This means you can earn an extra €4,000 which is only taxed at 20% instead of 41%. This is a tax saving of €840. (Please note that this information is based on the 2012 tax rates).

Social Welfare payments to single parents

Claiming the one-parent family tax credit will not affect your entitlement to the One Parent Family Payment from the Department of Social and Protection if you are in receipt of same. However don’t forget that the One Parent Family Payment is a taxable source of income and the tax due on this payment is collected by means of an adjustment to your tax credit certificate. It is advisable to make sure that Revenue is aware that you are in receipt of this payment in order that they can adjust your tax credits accordingly. If you do not, you may find yourself with an unexpected tax bill at a later stage when or if Revenue contacts you about this.

How to claim this tax credit

You can claim this tax credit by sending in Form OP1 to Revenue. You will find a link to this form below.

http://www.revenue.ie/en/tax/it/forms/op1.pdf

Alternatively you can claim using PAYE Anytime. If you are not registered for PAYE Anytime, you can do so here: http://www.ros.ie/paye/launchPAYEanytime_en.html

If you have any questions or need advice, don’t hesitate to contact Fenero on info@fenero.ie or 01-6877400.

Bank of Ireland to change current account fee structures from November 2012

Bank of Ireland has announced that new charging structures will apply to current accounts from the fee quarter beginning 19^th November 2012. From this date onwards you must maintain a minimum balance of €3,000 at all times in order to avoid paying transaction fees.

Currently in order to avoid transaction fees you need to lodge at least €3,000 throughout the fee quarter and also to make 9 debit transactions per quarter using 365 phone or 365 online. This change is likely to impact on a large amount of people who are currently avoiding transaction fees.

In a previous post on our blog earlier this year, we wrote about the options available after AIB announced the re-introduction of current account fees in May of this year. Much of the same still applies and you can recap on that blog article here:  http://smallbusinessadviceireland.blogspot.ie/2012/05/minimising-cost-of-aibs-reintroduced.html

Should I transfer some money from my savings account into my current account to enable me to maintain a minimum balance of €3,000?

This will depend on what interest rate that you are earning on your savings account and what fees that you will pay to Bank of Ireland. If the interest that you will earn on your savings is less than the fees payable on your current account, then it makes sense to transfer money from your savings account into your current account.

Example 1

If you pay €20 per quarter in bank fees, this is a total of €80 per annum.

If you have €3,000 on deposit at an interest rate of 3%, you will earn €90 gross interest of which €27 will be taken as DIRT (Deposit Interest Retention Tax - currently charged at a rate of 30%), leaving you with €63. As €63 is lower than the €80 you are paying in fees, you would be better to transfer the savings into your current account to maintain a minimum balance of €3,000.

Example 2

If you are on the flat fee rate of €11.40 per quarter (which allows for up to 90 transactions to go in and out of your account) you are paying a total of €45.60 per annum.

If you have €3,000 on deposit at an interest rate of 3%, as outlined above you will receive a net amount of €63. As €63 is higher than the €45.60 you are paying in fees, you would be better to leave the money in your savings account and instead to incur the current account fees.

In this same example however, if you have €3,000 on deposit at a lower interest rate of 2%, you will earn €60 gross interest of which €18 will be taken as DIRT, leaving you with €42. As €42 is lower than the €45.60 you are paying in fees, you would be better to transfer the savings into your current account to maintain a minimum balance of €3,000.

Which banks are offering fee free current account services?

Currently Ulster Bank is the only bank offering fee free banking. They had previously indicated that this would change but after the massive recent IT meltdown they have advised that fees for current account services will not be introduced at least until July 2013. However the fact that a date has been provided suggests that fees will definitely be introduced at some point.  

Dublin Accountants and Tax Advisors  www.fenero.ie

Are you thinking of returning to work after having been unemployed for more than 12 months? Extra tax credits are available to significantly reduce the tax you pay on your earnings.

If you are returning to work after at least 12 months unemployment or on an employment scheme or FAS course, you may be entitled to significant extra tax credits to reduce the tax that you will pay on your earnings for a period of three years after returning to work, meaning more money in your pocket.

These extra tax credits are available through the Revenue Job Assist Scheme. Revenue Job Assist is an additional tax allowance for people who have been unemployed for 12 months or more and who are now returning to employment.

If you have children, the scheme allows for further extra tax credits in respect of each qualifying child (see below for more information).

How much additional tax credits are available?

The additional tax credits under Revenue Job Assist are significant and cover a three year period after the date you return to work to support a longer term return to work.

In year 1 you are entitled to extra tax credits of €3,810 plus €1,270 for each qualifying child

In year 2, €2,540 plus €850 for each qualifying child

In year 3, €1,270 plus €425 for each qualifying child

It may be more meaningful to express this in terms of how much extra income you can earn tax free under this scheme. These extra tax credits will enable you to earn extra income each year free of PAYE tax in the amount of:

Year 1 - €19,050 plus €6,350 for each qualifying child

Year 2 - €12,700 plus €4,250 for each qualifying child

Year 3 - €6,350 plus €2,125 for each qualifying child

USC and PRSI will still be charged on your income however.

Example

In 2012 a single person working as a PAYE employee has a minimum the single person tax credit of €1,650 and the PAYE tax credit of €1,650. This is a total of €3,300 in tax credits which allows that person to earn €16,500 per annum without paying income tax. PRSI and USC are still payable as normal.

Under Revenue Job Assist a single person (without children) would also have further tax credits of €3,810 giving total tax credits of €7,110. This allows that person to earn €35,550 per annum (in year 1) without paying income tax. PRSI and USC are still payable as normal.

In addition to these extra tax credits, you may also be able to retain your medical card and other secondary benefits under the scheme.

You can also choose to start claiming these extra tax credits either as soon as you return to work or to wait until the following year. If it be beneficial to wait until the following year to start claiming these tax credits, perhaps because your total income will be low in the first year that you return to work, you have the option to do so.

Who qualifies for Revenue Job Assist?

 You may qualify for Revenue Job Assist if you have been:

·         Getting Jobseeker's Benefit or Jobseeker's Allowance for 1 year or more,

·         A lone parent on the One-Parent Family Payment,

·         Getting Disability Allowance or Blind Person's Pension for 12 months or more,

·         Getting Invalidity Pension for 12 months or Illness Benefit for 3 years or more,

·         Released after 12 months or more in prison,

·         Signing for PRSI credits (since 1 January 2012).

The job you are taking up must be a “qualifying job” which means it must:

·         Be for a minimum of 30 hours a week,

·         Be capable of lasting at least 12 months;

And

·         There must have been no redundancies within the company in the last 26 weeks,

·         The job must not be a primarily commissioned based role.

Time spent on a FAS course or employment schemes listed below will count as periods of unemployment for the purposes of the scheme, provided that you were in receipt of one of the above payments immediately prior to commencing the course or employment scheme.

·         Certain FÁS training courses (non-apprenticeship)

·         The Community Employment Scheme

·         The Job Initiative programme

·         The “Workplace” 5 week job experience programme

·         The Back to Education scheme administered by the  Department of Social Protection

Additional tax credits for qualifying children

Additional tax credits are available for each “qualifying” child that you have. A qualifying child is a child of yours, your spouse or your civil partner who is:

·         Under 18 years of age;

·         Over 18 and in full-time education or full-time training as an apprentice where the training is for at least two years;

·         Permanently incapacitated either physically or mentally, having become so before reaching 21 years of age or after reaching the age of 21 but while still in full-time education or while training fulltime for a trade or profession for a minimum of 2 years.

Other information

Revenue Job Assist only applies if you are taking up a job and does not apply if you are becoming self-employed. It can only be set against income from the new job that you have taken up and any unused portion cannot be transferred to a spouse.

You may change employment once during the three year period and keep the allowance provided the second job is also a qualifying employment. If you move onto a third job you will lose the allowance.

Summary

As can be seen there are significant tax savings to be made under the Revenue Job Assist scheme. Please do not hesitate to contact Fenero if you need assistance with applying for this scheme or for help working out whether it would be beneficial to wait a year before you start claiming the additional tax credits.

Minimising the cost of AIB's reintroduced current account fees

From today AIB customers face the reintroduction of fees on current accounts. Customers will need to maintain a balance of at least €2,500 in their account at all times in order to avoid transaction charges. For those who do not maintain this level of cash in their account, the following fees will apply:

€4.50 flat rate maintenance fee per quarter

20 cent for every electronic transaction (e.g. ATM withdrawal, laser/debit card, direct debits, online transfers)

30 cent for every paper transaction (e.g. lodging a cheque, branch withdrawal of cash, branch lodgement of cash)

So what are the options for avoiding these fees?

1. Move €2,500 from a savings account into your current account

2. Understand the fees and attempt to minimise them

3. Move to a new bank

1. Move €2,500 from a savings account

If considering this option you need to make a rough calculation as to whether the interest that you will earn on the savings account is greater than the amount of fees you will be charged on your current account. Currently the maximum that you may be able to earn on deposit accounts is in the region of 4%. If you have €2,500 on deposit earning a rate of 4% this will pay you €100 annually. You will then pay 30% DIRT on this, leaving you with a total of €70. If you expect that the annual bank fees on your current account will be greater than €70, it would therefore be worthwhile forgoing this interest and transferring €2,500 from your savings account into your current account.

Under the new regime in order to be charged €70 per annum in transactions fees, you would only need to make between 6 and 7 electronic transactions per week e.g. two ATM withdrawals and 4 uses of your laser/debit card per week. This is not a huge amount of usage for most people. Your monthly direct debits would be additional electronic transactions on top of this.

Given the fact that it is quite easy to reach a level of transactions costing €70 per year, plus the fact that 4% is a good rate of interest of savings and you may well be earning less than this (also that deposit rates are likely to start falling in the near future), it appears that in many cases you would be financially better off to transfer €2,500 from a savings account into your current account.

2. Understand the charges and seek to minimise them

The €4.50 quarterly fee is a flat rate fee so you have little control over this. However you can seek to minimise costs by using less paper transactions (charged at 30 cent) and more electronic transactions (charged at 20 cent). You can also attempt to reduce the number of electronic transactions that you make by availing more regularly of cash back options when using your laser/debit card (as this will only count as one transaction) or by withdrawing larger amounts from the ATM rather than regular small amounts. However practicalities are likely to limit the options realistically open to you in attempting to minimise the number of transactions that you make.

3. Move to a new bank

As ever there is the option to shop around and switch banks. However in the current climate all banks are under pressure to increase their income, most likely through service fees, so this is an area that you will need to watch carefully.

Ulster Bank – currently still do not charge fees on current accounts. However indications are that this may be likely to change in the near future.

Bank of Ireland – there are two ways to avoid fees on current accounts. The first is to lodge a minimum of €3,000 per fee quarter (e.g. €1,000 per month, which could be your salary). It is not necessary to maintain a balance of €3,000, just simply to have it lodged. Additionally you are required to make 9 debit payments over the fee quarter using online or telephone banking (e.g. 3 per month). Alternatively if you are not making regular lodgements to the account and can instead maintain a balance of at least €3,000 throughout the period you will avoid transactions charges.

Permanent TSB – to avoid current account fees you must meet a number of criteria. You must lodge a minimum of €3,000 to the account per fee quarter, make 18 card purchases and conduct one transaction using Open 24 internet or telephone banking.

If you believe that you cannot meet the criteria for any of the above free banking options with any of the banks, you should review the pattern of your current account usage to determine the average volume of transactions and the typical nature of the transactions. Armed with this information you can then review the fees chargeable by each bank to see which is likely to work out the cheapest for your own typical account usage.

PTSB Tracker Mortgage Overpayment Bonus

PTSB announce details of their Tracker Mortgage Overpayment Bonus. Their statement is below:


This offer is unique in the market and another first for permanent tsb customers. Under this new deal, any customers who can make an overpayment on their tracker mortgage will get an automatic extra 10% bonus which will be set against their outstanding mortgage. Their mortgage term is automatically then reduced which can generate huge savings in interest payments over the the life of customer’s mortgages. The offer will be open to customers who make additional payments of €5,000 (or multiples thereof) up until June 17th next. The initiative is open to all of the banks tracker mortgage customers whether they have Residential , Commercial or Investment mortgages . Customers can avail of the offer on payments made up to a maximum of 50% of the outstanding balance on the mortgage. The offer is also available to customers who are currently in arrears and the bonus payment will apply to any payments made once the arrears have been cleared . Customers availing of this offer will continue to enjoy their current tracker product benefits after any extra payments are made. All the Price Promise Tracker customers will start to get letters that outline details of how the offer works, later this week.

How it WorksTracker customers will receive a letter over the coming days with details of the offer, plus an application form and an addressed envelope. Customers simply fill out the form and return it with their overpayment amount to the Mortgage Department. When the Overpayment is applied to their mortgage an additional 10% will be added, which further reduces their outstanding balance. This offer is only available to existing Tracker mortgage customers and is open until June 17th.

Philip Mongan
Head of Intermediary Operations permanent tsb

Have you shopped around for life insurance lately?

Many of the insurance policies that we all take out have to be renewed every year. For most of us this means once a year ringing around for car insurance, house and contents insurance amongst others.

But how many of us remember to shop around for life insurance and/or mortgage protection? Are you still paying the most competitive rate? Do you still have a policy which reflects your current needs?

Ensuring that you have a policy which reflects your current needs is just as important as getting the cheapest premium. For example, do you have a family or dependents? For as little as €20 or €30 a month you can help to provide for their future financial security by providing them with a lump sum of money payable on your death.

The below are a range the current lowest rates available on the market (prices correct as of 13th March 2010). Using this list may help to give you an indication of what you should be paying. For a specific quote based on your own details, drop Fenero a line and we will get back to you within a few minutes with a quote for the lowest cost life assurance or mortgage policy.

As you will see from the below, the biggest factors which affect the cost of life insurance and mortgage protection are your age and whether you are a smoker. So if you do not currently have any cover, or if you are looking to increase it, the sooner you do so, the cheaper it will be.

COVER OF €250,000
NON SMOKERS

Single person/cover

Male, 25 years old, Non-Smoker
Life: €16.84 MP: €12.97

Male, 35 years old, Non-Smoker
Life cover: €28.81 MP: €21.42

Female, 25 years old, Non-Smoker
Life: €12.95 MP: €10.10

Female, 35 years old, Non-Smoker
Life: €22.60 MP: €16.65

Couples/joint cover

Male & Female, 25 years old, Non-Smokers
Life: €26.64 MP: €17.70

Male & Female, 35 years old, Non-Smokers
Life: €44.45 MP: €30.35

Male & Female, 45 years old, Non-Smokers
Life: €102.11 MP: €78.56

COVER OF €250,000
SMOKERS

Single person/cover

Male, 25 years old, Smoker
Life: €26.98 MP: €19.33

Male, 35 years old, Smoker
Life: €51.79 MP: €31.36

Female, 25 years old, Smoker
Life cover: €19.95 MP: €15.11

Female, 35 years old, Smoker
Life: €37.65 MP: €27.47

Couples/joint cover

Male & Female, 25 years old, Smokers
Life: €41.64 MP: €26.84

Male & Female, 35 years, Smokers
Life: €79.64 MP: €53.80

Male & Female, 45 years old, Smokers
Life: €202.01 MP: €144.68


COVER OF €350,000
NON SMOKERS

Single person/cover

Male, 25 years old, Non-Smoker
Life: €21.30 MP: €16.81

Male, 35 years old, Non-Smoker
Life cover: €39.31 MP: €28.99

Female, 25 years, Non-Smoker
Life cover: €16.92 MP: €12.02

Female, 35 years old, Non-Smoker
Life: €30.62 MP: €22.29

Couples/joint cover

Male & Female, 25 years old, Non-Smokers
Life: €35.90 MP: €23.31

Male & Female, 35 years old, Non-Smokers
Life: € 61.21 MP: €41.48

Male & Female, 45 years old, Non-Smokers
Life: €141.93 MP: €108.97


COVER OF €350,000
SMOKERS

Single person/cover

Male, 25 years old, Smoker
Life: €35.88 MP: €26.16

Male, 35 years old, Smoker
Life cover: €71.48 MP: €49.82

Female, 25 years old, Smoker
Life cover: €26.91 MP: €20.14

Female, 35 years old, Smoker
Life: €51.70 MP: €37.45

Couples/joint cover

Male & Female, 25 years old, Smokers
Life: €57.30 MP: €36.65

Male & Female, 35 years old, Smokers
Life: €110.47 MP: €72.43

Male & Female, 45 years old, Smokers
Life: €281.79 MP: €201.54

* Prices include 1% government levy
** Prices are the monthly premium payable
*** Prices correct as of 13 March 2010
**** Prices are based on normal rates
***** MP = Mortgage Protection; Life = Life cover/Term Assurance

Personal Debt Write Off Scheme

According to reports, the Government has agreed to create new arrangements to assist individuals who cannot pay their personal debts. Details of the scheme have yet to be released but are believed to be similar to the IVA scheme in the UK. IVA stands for individual voluntary arrangements.

Under the UK’s IVA scheme, an individual agrees to disclose their full level of indebtedness to all their creditors. An independent financial advisor makes a ruling on how much of the individual’s debts should be written off. This ruling is only binding however if creditors representing 75% of the total debts agree to it.

Key to this scheme is that these agreements do not involve the courts but remain legally binding. In avoiding the courts, the agreements are kept private and, if successful, avoid a person filing for bankruptcy.