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“We’re trying to get the message out to the PAYE sector who have been hit with a lot of tax and cuts in the last number of years in the Budgets,” says Jim McCarthy, a partner at Quintas Wealth Management.
“The Government have de-risked Employment Incentive Initiative (EII) so that if you put your money into that scheme now you are going to generate 41 per cent tax saving. If you have €10,000 sitting in a deposit account earning two per cent interest you can now put that money to work in a much more beneficial way so you now will be able to save more and receive a better return on your investment.”
The money can now be invested in a wide range of companies, as compared to before where only manufacturing companies were considered. The scheme has been renamed from its original title of Business Expansion Scheme (BES) and is intended for higher earners paying a tax rate of 41 per cent with a minimum of €10,000 a year to invest.
“Basically you are taking out of a two per cent deposit return and into a 10 per cent return. There are some exceptions but by and large, most companies qualify. Your local Centra store that is turning €200,000 a week literally could now qualify. You could warehouse your money in there for three years and take it out while the store owner can renovate the shop etc.”
“The only criteria is that the store maintains employment levels throughout the term of the investment. You receive 30 per cent of the 41 per cent tax relief regardless and you get the 11 so long as he maintains or grows his employment by one over the three year period.”
The scheme, which has been reduced in term from five to three years, is designed to allow private individuals back sustainable, stable businesses.
“It can protect the jobs in those businesses where regular finance has dried up,” says Mr McCarthy.
“You are basically trying to redirect all the money that is sitting inside deposit account into an investment scheme which will save them tax.
Learn the tricks
Mr McCarthy urged people to become more aware of the schemes that out there like the EII.
“Anybody paying tax at 41 per cent needs to learn the trick of the self-employed,” says Mr McCarthy.
“It frustrates me a bit when you hear people saying self-employed workers are getting all these schemes and not paying the right amount of tax. These schemes are open to the PAYE workers as well.”
Mr McCarthy urged people to contact Quintas to find out what sort of tax relief are available to them
“The Government are making money on your money by buying bonds for 10 per cent and giving you two per cent of the 10,” says Mr McCarthy.
“We all focus on our bank charges and what it costs to run a bank account. Nobody focuses on the opportunity you are losing having cash in the account. The astute investor will take it out and it is a better way of saving than a pension. With the EII you can get your funds back in 3 to 4 years. People are paying into a pension scheme but not seeing it until they are 65. There is a lot of austerity coming so people need to be more informed about the reliefs that are there for people.”
However, Mr McCarthy did admit that there is a certain level of risk with the scheme.
“Whenever you move from the comfort zones of the deposit account there is a certain amount of risk. However, this is a low risk product but there is always risk with finance.”
To discuss the fund in further detail or to receive a prospectus contact Jim McCarthy or Kenny Kane at 021-4641480.