Q I have been chatting with my friends and we are confused as to whether I need to do a tax return. They are all fully PAYE in terms of their income and while I’m also in a steady job, I have dabbled a bit with bitcoin over the last few years. I’ve had some losses and some gains, but overall I’m up. Do I need to declare this and do a tax return?
A The simple answer is that, in most cases, anyone earning additional income outside the PAYE system, through rent, investments, or self-employment, is obliged to file an annual tax return, says Marian Ryan, the consumer tax manager at Taxback.com.
When it comes to cryptocurrency, Revenue looks upon the return on the investment the same way it does any other investment, such as stocks or shares. Whether you make a profit, or a loss, through the disposal – by selling, exchanging, or even gifting of your bitcoin – you will need to declare it after a certain amount, she says.
The first €1,270 (less any deductible expenses) is exempt as per normal Capital Gains Tax rules, but after that, any profit made is taxable at 33pc. For gains made between January 1 and November 30, the tax due must be paid on or before December 15 in the same tax year.
A new EU regulation came into force in June which generates much tougher compliance for cryptocurrency service providers and exchanges, making activities easier for authorities such as Revenue to monitor. So, it’s better that you tell them before they ask, Ms Ryan said.
Q Myself and my husband are both aged 58, in full-time employment and in a few years’ time, our mortgage protection policy will come to an end. We have no children and the mortgage will be paid off. However, a new policy is really expensive. What options do we have?
A Based on the information you have provided, it seems you took out a term policy (mortgage protection/life protection) that was designed to provide protection in the event one of you died, says Frank Conway, founder of financial wellbeing provider MoneyWhizz and a qualified financial adviser.
The proceeds of this policy would be used to repay the outstanding balance on the mortgage. Now that term is coming to an end, your need for that policy will also come to an end. In other words, you will no longer require mortgage protection.
However, you seem to be under the impression that you should have some level of life protection cover in place and having examined some options, are concerned that the cost of cover could be really excessive.
The truth is the need for such protection is less relevant as one ages, especially as children become independent and mortgages get paid off, Mr Conway says. What does become more relevant as one ages is pension contributions. The fact both you and your husband are in full-time employment means that you can presently save 35pc of your gross income into a pension account (within limits).
This can be either by way of an occupational pension scheme or also, a Personal Retirement Savings Account (PRSA). This increases to 40pc of gross income when you turn 60. So, from an overall financial wellbeing perspective, while having the right level of protection in place is important during the many stages of our lives, it is also important not to be over-insured either.
Even if you were successful in securing life protection cover, you are certain to find the premium excessive. That money could be put to a more efficient use by way of a pension where the funds you invest will be ready and waiting when you retire, Mr Conway says.
Q I have a €250 excess on my health insurance policy for hospital admissions. Does this mean I have to pay this for every night I’m in hospital?
A It is a good idea to have a small excess on your policy as this helps to reduce the overall cost, according to Dermot Goode of TotalHealthCover.ie. It is important to note that these excesses never apply to public hospital admissions, he said.
They only apply when you are admitted to any private hospital. Also, on most plans the excess is only payable per admission and never per night.
This means that irrespective of whether you are admitted for one night, two weeks or even for a day-case procedure, you will pay a once-off excess on the entire claim, Mr Goode said.
If this is a concern, he recommends that you consider upgrading your cover at some point to take on a lower excess.