Will I have to pay tax if I draw down my British work pension?
Published 05/04/2015 | 02:30
I worked in Britain for some years and retired home to Ireland, receiving only my State pensions - half Irish and half English.
I also have a work pension from a company I worked for in Britain which I have not taken yet. I am not happy in Ireland and may return to Britain - but with the euro versus sterling conversion rate, it is not easy.
Would I be able to draw my British pension, and have it paid into a British bank where I still have a small account - without having to pay any tax in Ireland on the British pension?
My intention would be not to take any of the pension money out of that account until I return to Britain to live.
John, Tralee, Co Kerry
Answer: On the assumption that you are tax resident and domiciled in Ireland, the answer is no.
You are not permitted to receive a pension in Britain and not declare it in Ireland.
Your comment about not taking the money out of the account refers to the remittance tax arrangements (when you are only taxed on foreign income if you bring it into Ireland) and that does not apply unless you are a non-Irish domiciled individual.
Visit a tax adviser and establish your tax residence and domicile position if you have any doubts on this matter.
Finally, inflation and exchange rate movements are the perils of dealing with dual incomes!
Question: When it comes to equity release for pensioners who own their property, I believe it is possible to obtain a loan (lifetime mortgage) from a financial institution here in Ireland.
However in Britain and particularly in France, it is possible to have a contract between two private parties, overseen by a lawyer.
Under that contract, an investor acquires the property at between 40pc and 50pc of its value in return for giving the seller a lifetime's tenancy.
In Britain, I understand the seller would get the whole amount (of the 40pc to 50pc value of the property) paid to him whilst in France there would be a lump sum followed by monthly payments for the rest of seller's life.
Could either of these systems work in Ireland and would it be possible to set up a similar one here?
Nora, Cloughjordan, Co Tipperary
Answer: I don't believe either the British or French systems are available in a structured manner in Ireland - but a good solicitor should be able to tell you if they can be set up on an individual basis.
As you state, lifetime mortgages may still be available in Ireland. Speak with an independent mortgage adviser and a legal adviser about the pros and cons of such mortgages.
You do not say why you may need equity release. Many people consider moving to a smaller house or apartment to release equity and possibly reduce bills. Or, if they have adult children, the children may consider buying the home and enabling the parents to remain in it for their lifetime.
If the equity release is to support a partner with nursing home expenses, consider the nursing home support scheme (also known as "Fair Deal").
Question: We are a married couple in our 30s and have two young children aged 8 and 5. My partner is a stay-at-home spouse.
Other than our mortgage protection insurance, we have no other life cover. I do however have 'death in service' life cover in work of four times my salary.
Do we need more life cover?
Tommy, Howth, Co Dublin
Answer: I would suggest you do. Your children are young so are most likely going to be financially dependent on you both until they are at least 18 (or maybe older if you think they will attend third-level education).
Life cover is designed to pay a lump sum in the event of premature death during the term of the life cover.
Let's look at two scenarios. Firstly, what would happen financially if you died prematurely?
The family home mortgage would be cleared by your existing mortgage protection cover, and your spouse and children would receive four times your salary from your death-in-service life cover.
(Remember, this death-in-service cover only applies whilst you are employed in your current job.)
You need to consider if four times your annual salary would be enough to maintain your family's current standard of living until your youngest (age five now) is at least 18.
Secondly, what would happen financially if your wife died prematurely?
Again, the family home mortgage would be cleared by your existing mortgage protection.
However, there would be no stay-at-home spouse to look after your home and children and provide all the support that you currently enjoy.
In this instance, your spouse should also have life cover.
Gerry Stewart is partner with Fagan & Associates
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