· Self Directed Pension Trusts are established under the terms of Chapter 30, Taxes Consolidation Act, 1997.
· The company creates an irrevocable Trust as a separate legal entity from the company. This Trust may only be accessed by the beneficiary.
· A Trust can be established wherever an employer/employee relationship exists and Schedule E income is paid to the individual.
· Contributions to and withdrawals from the Trust are related to income level and current age.
· A Revenue approved Trustee, known as a Pensioneer Trustee, must be appointed to ensure the Trust is administered in accordance with Revenue guidelines. This service is provided by Independent Trustee Company Limited.
· The individual acts as Co-Trustee and controls all transactions with joint signing authority.
· Investments or transactions involving the sponsoring company are generally not permitted except in special circumstances.
· Investment is not permitted in antiques, fine art, vintage cars and similar forms of Alternative Investments.
For details, please email info@moneydoctors.ie or call Dublin 278 5555
KEY BENEFITS to the individual
· The transfer of money into the Trust will not result in a personal tax liability for the individual.
· The individual is the sole beneficiary of the Trust. The assets of the Trust cannot be accessed by creditors in the event of company failure.
· Current profits and retained earnings in the company can be transferred into the Trust for the benefit of the individual.
· The Trust can invest in areas of personal interest to the director including property, private companies, equities, gilts, tracker bonds, deposits, investment funds, etc.
· All investments grow free of Income Tax and Capital Gains Tax.
· The involvement of the director in the management of the Trust depends entirely on the level of personal interest. It can be a hands-on or hands-off arrangement. Investment expertise is not necessary.
· Benefits can be drawn directly from the Trust at retirement commencing at age 50.
KEY BENEFITS to the company
· Transfers to the Trust are tax deductible for the company and will reduce or eliminate the current Corporation Tax liability.
· Full tax relief is guaranteed for the company provided Revenue guidelines are followed.
· Transfers to the Trust can be varied each year to suit the financial circumstances of the company.
· The Trust is confidential and separate from the staff benefits scheme. This may suit directors and senior employees.
· Trusts are an ideal vehicle for the remuneration, motivation and retention of key employees who are not directors.
· Trusts can be used as part of an efficient business exit plan for family owned companies by assuring the financial independence of the retiring generation.
· There is complete transparency of all initial and annual fees. There are no hidden charges. All fees are tax deductible.
· All Trust administration is done by the Pensioneer / Trustee
PENSIONEER / TRUSTEE SERVICES & TECHNICAL ASPECTS
· Preparation of all scheme documentation including Trust Deed, Members Explanatory Booklet, Scheme Rules and other documentation.
· Completion of initial application and approval process to register the scheme as an exempt approved scheme with the Revenue.
· Registration of the scheme with the Pensions Board and compliance with the Pensions Act, 1990, and regulations thereunder.
· Compliance with Revenue regulations and management of ongoing Revenue queries and requirements.
· Provision of Pensioneer Trustee Services on an ongoing basis.
· Preparation of scheme accounts on an annual basis. This includes cost of having same signed off by an Auditor.
· Production and submission of Triennial Actuarial Reviews to Revenue Commissioners.
· Self Directed Pension Trusts are established under the terms of Chapter 30, Taxes Consolidation Act, 1997.
· The company creates an irrevocable Trust as a separate legal entity from the company. This Trust may only be accessed by the beneficiary.
· A Trust can be established wherever an employer/employee relationship exists and Schedule E income is paid to the individual.
· Contributions to and withdrawals from the Trust are related to income level and current age.
· A Revenue approved Trustee, known as a Pensioneer Trustee, must be appointed to ensure the Trust is administered in accordance with Revenue guidelines. This service is provided by Independent Trustee Company Limited.
· The individual acts as Co-Trustee and controls all transactions with joint signing authority.
· Investments or transactions involving the sponsoring company are generally not permitted except in special circumstances.
· Investment is not permitted in antiques, fine art, vintage cars and similar forms of Alternative Investments.
INVESTING IN PROPERTY
Investment criteria
One of the key benefits of a Small Self Administered Scheme (SSAS) is its ability to invest in real property. The Revenue Commissioners have introduced some criteria that specifically apply to property investment:
the vendor must be at arm’s length from the scheme and the employer including its directors and associated companies.
the purpose of the acquisition is not for disposal or letting to the employer, including its directors and associated companies
the scheme must have sufficient liquid investments to meet its liabilities
the acquisition and development of a property with a view to its disposal is not regarded as a tax exempt scheme investment
the acquisition of property for personal use (rather than for investment purposes) is prohibited
Once these criteria are satisfied a scheme can invest in any type of property based anywhere in the world. This can include residential, office and industrial buildings.
A property purchase relates to properties purchased in the UK and Ireland only. We will also facilitate purchases outside of these areas. However this requires legal and financial planning. Please contact us for further information.
GUIDE TO PROPERTY PURCHASES – For details, please email info@moneydoctors.ie or call Dublin 278 5555
Six Steps
1. Application Form
2. Valuation
3. Borrowing
4. Insurance
5. Legals
6. Property Management
STEP 1. Application Form
When you have identified the property that you want to buy, the first step is to advise the estate agent or the vendor that the contracts must be forwarded to Pensioneer’s Legal Department. It is important to realise that your scheme is the Purchaser rather than you personally. You then contact us and complete a Application Form. When we have received a completed form, we will then arrange the loan. It is very important that all the fields of the form are completed and the form submitted without delay.
STEP 2. Valuation
Requirements in relation to the administration of your scheme necessitate that all properties are valued by the Pensioneer’s own valuer. This means that they are in a position to monitor fluctuations in value, to monitor insurance levels, and ensure your scheme is fully compliant with Revenue regulations on an ongoing basis.
STEP 3. Borrowing
We will make the loan application on your behalf directly with the bank. Your loan will be granted on a limited recourse basis. This means that the bank has security over the particular property only and not over any other of your personally owned assets or any other assets of the pension scheme.
Banks are currently offering loans of up to 70% (LTV) of the purchase price of the property for a term of maximum 15 years.
An arrangement fee of 0.5% – 1% of the loan amount and a legal fee may be applied by the bank.
Interest rates vary in accordance with market rates.
The granting of the loan is subject to the bank’s lending criteria. .
An equity balance of €10,000 generally must be available at all times in your trust account to protect the liquidity of the trust.
When the Loan Offer has issued you will be contacted by your Pensioneer to approve it
STEP 4. Insurance
Pensioneers usually have their own insurance policy for all properties held in a pension trust. It is not necessary for you to arrange property insurance as the property is already covered as from the date of closing. The insurance is specially designed for trusts. If the property is already covered by Block Insurance this will be added on to provide contents cover and Owner’s Liability Insurance.
It is essential that you advise us of the type of tenants to whom you are renting the property ie: Professional, Social Welfare, Students or Commercial as this has a bearing on the insurance contract.
STEP 5. Legals
A Pensioneer’s Legal Department undertakes the conveyancing of Irish properties. They will liaise with the vendor’s solicitor, examine the title, have the contracts signed, draft the title deeds, deal with the bank’s solicitor and close the deal. If it is a UK property, the Pensioneer will appoint a solicitor in the UK. The Legal Department also provides a Tenancy Agreement as part of the service.
STEP 6. Property Management
It is important that a professional Property Manager is appointed to manage the property.
A Property Management Agreement must be signed by the Property Manager to ensure that he/she is aware of his/her duties and responsibilities.
The Rent can be paid to the professional Property Manager and expenses appropriate to the property discharged from the income. The balance is paid to the property bank account. The agent provides accounts to your Pensioneer on a yearly basis.
VAT NOTE
Commercial properties and commercial lettings may be registered for VAT. This will enable VAT paid to be reclaimed from Revenue (or offset against any VAT liability). If you wish to register your property for VAT please include this information on the Propertyline Application Form. We will then refer all VAT issues including registration and returns to your Pensioner’s VAT agent. There is a separate fee payable for this service.
SHARE INVESTMENT
· You decide which broker you would like to use.
· You can deal with any regulated broker in Ireland, UK, US or further afield.
· An account is opened with this broker in the name of the Pension Trust.
· Funds are transferred to the broker to commence investing.
· Once funds are with the broker you are free to buy and sell whatever shares you want to.
· As with all investments in a Pension Trust, dividend income and capital gains are tax free.
· At any time funds can be re-directed to other investments such as property.
For details, please email info@moneydoctors.ie or call Dublin 278 5555
RETIREMENT FUND EXTRACTION
1. Funds can be accessed:
At age 60
At age 50 (if you retire)
At any age (if you retire due to ill-health)
On Death
2. In each case some or all of the Fund can be taken as a Tax Free Lump Sum. This amounts to:
1.5 times salary on retirement or
25% of the Fund if you choose your Proprietary Director options (see below).
4 times salary on death.
3. The balance of the Fund (if any) can be used in one or more of the following ways
Full encashment, subject to tax at marginal rates (not available on death)
Annuity purchase
Transfer to an ARF (Approved Retirement Fund (see below).
Under your Proprietary Director options, a transfer to an ARF is not taxable. Profits and Gains of the ARF are not taxable. Withdrawals from the ARF will be subject to Income Tax. This is collected under the PAYE system.
An ARF inherited by children over 21 will be exempt from Inheritance Tax but is subject to PAYE at the standard rate. An ARF inherited by children under 21 is exempt from Income Tax but is potentially liable to Inheritance Tax.
For details, please email info@moneydoctors.ie or call Dublin 278 5555
Maximum Funding – Illustrative Table
Providence Finance Services Limited trading as Money Doctors is regulated by the Central Bank of Ireland