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An Post bonds now a 'no-brainer'

The Budget move to hike the tax on savings to 30pc next year makes tax-free savings certs and bonds issued by An Post a "no brainer", analysts said yesterday.

Someone putting money on deposit for three years would need to get an interest rate of 4.6pc on their deposits from a bank to match the tax-free return from An Post bonds, consultant actuary Tony Gilhawley said.

This is because they will lose 30pc of any interest they earn in a bank due to the higher deposit interest retention tax (DIRT) rate coming in on January 1. The rate is going up from 27pc.

For someone getting around 4pc a year on a fixed-term Bank of Ireland savings account, the higher tax will add around €12 to the annual DIRT charges on balances of €10,000.

Savings bonds pay an annual equivalent rate of 3.23pc if left invested for three years, Mr Gilhawley said.

Those who are over 65 and have an income of less than €18,000 for a single person, or €36,000 for a couple, can get an account where no DIRT is due.

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