• Income from the austerity-era Life Levy paid by middle income investors has increased by 250% since 2009
• Life Assurance Exit Tax not reduced in line with DIRT in recent Budget – impacting on small and medium sized savers and investors

10th November, 2016. Insurance Ireland has again called for the abolition of the Life Assurance Levy and reform of the Life Assurance Exit Tax which disproportionately affect Life Assurance savings and investment products availed of by middle income earners.

The 1% Life Levy was introduced in the budget in 2009 on policy types of life assurance including savings and investments. Since its introduction, the amount the Life Levy brings in has increased from €8.7m to €30.7m in 2015, which equates to a 250% increase. The Levy does not apply to competing high-end investment products offered by providers like stockbrokers and wealth managers and so it creates a two-tier system for Irish investors.

Prudent small and medium sized savers and investors are also being penalised by the failure to reduce the Exit Tax on Life Assurance products in line with the reduction in DIRT in the recent Budget. Traditionally both were linked, however, the 8% reduction in DIRT to bring it down to the CGT rate by 2020 will not apply to the Exit Tax, placing these investors and savers at a disadvantage.

Kevin Thompson, CEO of Insurance Ireland stated: “Life Assurance investments level the playing field by offering a route for middle income individuals and families to invest and grow their wealth in assets which may not otherwise be accessible to them. This allows these investors and small savers to plan more effectively for areas such as their children’s third level education or for a rainy day.

“However, the Life Assurance products these prudent individuals and families invest in are liable for the Life Levy when higher-end investment products are not. This unequal application of the Levy can no longer be justified. In addition, the failure to reduce the Exit Tax in line with DIRT further disadvantages these investors when Government policy should encourage sound financial planning and not give preferential treatment to certain investment types.

Kevin concluded “Insurance Ireland is calling on the Government to use the Finance Bill to remove this unequal tax burden and give a fair deal to middle income investors.”

Other forms of investment do not attract the Life Levy but come under Capital Gains Tax instead, which is charged at 33% as opposed to the Life Assurance Exit Tax of 41%.

Ends.

Media contact:

John Byrne

Communications Manager, Insurance Ireland

Tel: 01 644 7781 / 087 9383852

Nuala Buttner

Q4 Public Relations

Tel: 01 475 1444 / 085 174 4275