We are now at that time of year where most doctors (employed and self-employed) are making their 2019 tax returns.

Depending on your personal circumstances, there are a number of tax relief opportunities you might want to consider.

 

1. Tax relief through pension contributions

GPs with GMS Income:

Those of you who wish to save for retirement in the most tax-efficient way should consider making a pension contribution prior to 10^th December if they are registered for online returns.

Please note that as a GP you do not have to make your AVC contributions to the GMS scheme directly. Contributions to a stand-alone PRSA AVC, for example, can be a very attractive option in that they offer:

 

1. Diversification away from the main GMS fund.

2. Full transparency on charges.

3. Flexibility on contribution amounts. You can change the premium amount on an ad-hoc basis.

4. Broader choice of investment funds appropriate to your risk profile.

 

IMO Financial Services also offers an AVC against GMS income which can be deducted straight from your pink sheets (PCRS deduction). This facility is not available through any other provider.

 

HSE-employed Doctors & Consultants:

These doctors can reclaim tax paid or reduce liabilities by contributing to a PRSA AVC. The HSE have different Superannuation schemes in operation at the same time. These benefits can be enhanced by contributing to a PRSA AVC. Which scheme you are a member of, along with your salary and service history, will dictate whether you should or should not contribute to a PRSA AVC.  It is specific to each individual but please be aware of the Revenue rules and limitations! Talk to a financial adviser who should ensure you do not exceed the Standard Fund Threshold.

 

Sessional Doctors:

Employed doctors in non-pensionable employment can fund a pension and avail of tax relief through either a Personal Retirement Savings Account (PRSA) or a Personal Pension.  There are many similarities between both routes including similar fund choices. You also get the same tax relief and options at the point of retirement. A key difference however lies in the charging structures they attract and whether funds can be transferred in early years without penalty.  Please speak to a financial adviser to see which route will serve you best

 

 

2. Tax relief through setting up a spouse’s Executive Pension Plan (EPP)

The recent IMO GP negotiations have brought pension accounts into sharp focus as we see enhanced GMS Superannuation funding for GMS GPs.

On the financial services’ side of the house we have started to focus our clients’ attention to the projected future value of their pension. We are seeing that a breach of the Revenue Standard Fund Threshold (SFT) is now a likely scenario for some, based on cash flows and modest growth. Where we project a client’s pension value, that will exceed the Standard Fund Threshold, we are recommending alternatives to personal AVC funding to slow down a potential breach of SFT.

In the case of a married couple, an alternative to an AVC with matching reliefs, is to avail of the opportunities around funding a retirement account for their spouse (EPP). Funding to an EPP is an excellent way to transferring funds their business in a tax-effective way, fund their spouses pension and avail of further relief.

 

3. Tax-relief through investing in an Employment Investment IncentiveScheme (EIIS)

The Employment and Investment Incentive Scheme (“EII Scheme”) is a tax relief incentive scheme which provides tax relief against total income for income tax purposes to qualifying investors for investments in certain qualifying companies. The EII Scheme offers one of the few remaining income tax reliefs and is one of the few sources of total income tax relief (which includes, for example, rental income or ARF distribution income).

Under the scheme, a taxpayer who puts money into an approved EII investment can reduce a substantial portion of their taxable income for the year in which the investment was made.

EIIS may be suitable for the following people:

• Those doctors who have maximised all pension opportunities.
• Doctors who are unable to fund pensions due to Revenue pension limits, (Standard Fund Threshold).
• Doctors who wish to avail of further tax relief.
• Retired clients who only have rental income or ARF distribution income.

 

IMO FS has a number of agency agreements with investment houses who market EII investments. We can provide all information and facilitate the arrangement of such an investment where appropriate.

Please note for tax relief on an EPP or EIIS, the contribution must be made before year end. 

If you wish to discuss any of these opportunities in further detail, please feel free to contact us on imofs@imo.ie.

 

Warning: Past performance is not a reliable guide to future performance.  Warning: The value of your investment may go down as well as up. The material in this email is not intended to provide advice and is provided for general information purposes only.

 

Fitzserv Consultants Ltd. t/a IMO Financial Services is regulated by the Central Bank of Ireland