The Fright of the Season: Tax Time 👻

As Halloween rolls around again, we’re returning to a subject that frightens more of our clients than any ghost story, Tax!

For the self-employed, company directors and anyone with additional income such as rental income, the next few weeks will be spent gathering receipts, invoices and paperwork for the accountant ahead of the Revenue Online Service pay-and-file deadline on 18th November 2026.

It’s easy to see why this time of year strikes fear into so many. For some, it’s the moment they realise they haven’t planned properly and now have to find a significant sum in a short period to settle their bill – and pay preliminary tax for 2026 on top of it.

Can You Still Reduce Your Tax Bill?

Every year around now, we’re asked the same question: “Is there anything I can do to reduce my tax liability?”

Unfortunately, the answer in most cases is the same as it was last year – not really!

It’s rarely worth hunting for a medical expense just to reclaim 20% in tax relief, and it doesn’t make sense to jump through hoops for minor credits like “flat-rate expenses”.

If you want to reduce your 2025 tax liability and it’s now November 2026, your one genuinely effective option is a personal pension contribution made and claimed before the 18th November deadline, which can be offset against last year’s bill. The relief is still available at your marginal rate, up to 40%, which makes it, by some distance, the most generous tax incentive left in the Irish system.

For company directors, it generally remains more tax-efficient to have the company make pension contributions on your behalf rather than contributing personally, although the timing rules are different and the company contribution won’t reduce your personal 2025 bill.

Credit Where It’s Due

Regular readers will remember that this time last year we welcomed the cut in exit tax from 41% to 38%, but described it as still a long way from where it needed to be. We said the regime needed reform, and that the gap between how Ireland taxes funds and how it taxes direct share ownership made no sense.

We’re pleased to say the Government has delivered – and then some.

Budget 2027, announced on 6th October, cuts exit tax on investment funds, ETFs and life assurance policies again, from 38% to 35%, with effect from 1st January 2027. At the same time, the standard rate of Capital Gains Tax has been reduced from 33% to 31%, effective immediately from Budget night. That’s the first CGT cut in well over a decade.

Taken together, the two changes narrow the gap between fund taxation and direct investment to four percentage points. A year ago it was eight. It’s not full alignment, but it’s real progress in a very short time, and it’s a direction of travel we’ve been calling for publicly for years.

The 1% annual levy on life assurance investment funds remains in place for now, so the irony we pointed out last year hasn’t fully disappeared: the State still takes a slice of the gain and shares none of the downside. But the slice is smaller, and the bigger news is what comes next.

The New Personal Investment Account

The headline announcement for investors is the introduction of a new State-backed Personal Investment Account, opening on 1st July 2027. Anyone who has read our pieces or heard us on the radio over the past year will know we’ve been pushing hard for exactly this kind of simple, tax-efficient investment account. So let’s start by saying clearly: this is welcome, and the Government deserves credit for getting it over the line.

Here’s how it’s expected to work, based on what was announced on Budget day. The final details will be set out in the Finance Bill, so some of this may be refined before launch:

• The first €50,000 of the account’s value is tax-free.
• Above €50,000, a flat charge of 1% per year applies to the value of the account. There is no exit tax, Capital Gains Tax or Dividend Withholding Tax on anything held inside it.
• There is no deemed disposal. The eight-year rule that has frustrated Irish fund investors for years doesn’t apply.
• Contributions are capped at €12,000 per year, with no minimum. You must be Irish resident, aged 18 or over, and at launch you can hold one account.
• The account can hold shares, bonds, investment funds and insurance-based products, and the provider calculates and pays the tax to Revenue on your behalf. No annual return, no self-assessment headache.

That last point matters a great deal. It’s the complexity of Irish fund taxation, as much as the rate, that has kept so many people out of the market. An account where the tax is handled for you removes that excuse.

Welcome, But Not Ideal

We’d be less than honest if we didn’t also say that this isn’t the account we argued for. Along with others in the industry, we lobbied for something much closer to the UK’s ISA: a genuinely tax-free wrapper with a meaningful annual allowance and the freedom to hold cash as well as investments. That argument appears to have been lost, and that’s fine; the Government had its reasons and a good account that exists beats a perfect one that doesn’t. But we’ve been on the record with our reservations and we’ll repeat them here.

“Difficult to understand why Ireland would shun UK’s model for savings accounts”

• The 1% charge on value above €50,000 is a levy on what you own, not on what you’ve gained. You’ll pay it in a flat year or a falling one just as you would in a good one, and over a long investing lifetime it adds up.
• Cash can’t be held in the account. For nervous first-time investors, or anyone who wants to hold back from the market for a while, that’s a real gap, and it’s one the ISA fills.
• The €12,000 annual contribution limit is on the low side. It will take years to build a balance that makes a meaningful difference, and it does little for anyone with a lump sum to invest today.

So, our view: a good first step and a genuine improvement on what’s available now, especially for money currently idling on deposit. But it is not a catch-all, and it shouldn’t be treated as one. Pensions will continue to offer far better tax relief for long-term savers, and a well-structured investment bond or fund at the new 35% rate still has a place for larger sums.

Don’t Overlook the Bare Trust

One opportunity that gets far less attention than it deserves, and that the new account doesn’t address at all, is the bare trust. For parents and grandparents who want to pass wealth to the next generation, it remains one of the most effective tools we have.

The principle is simple. Each individual can give €3,000 a year to any other individual under the small gift exemption, completely free of Capital Acquisitions Tax and without touching the recipient’s lifetime threshold. Two parents and four grandparents can each use that exemption for each child or grandchild, every year. Over a childhood, that adds up to a very substantial sum, all of it outside the CAT net.

Gifting the money is only half the job, though. Invested through a bare trust product, those annual gifts are held and grown for the child’s benefit, with the growth belonging to the child from day one rather than being added to the parents’ or grandparents’ estate. For families likely to face an inheritance tax bill down the line, it’s one of the few planning strategies that works reliably, year after year, regardless of what happens to tax rates in the meantime.

Show Me the Incentive

Irish households are still sitting on well over €180 billion in deposits, much of it earning interest below the rate of inflation.

No one is suggesting everyone should rush to invest all their cash. But history shows that incentives drive behaviour. When tax policy encourages long-term investment, people make decisions that improve both their own financial wellbeing and the economy at large.

The legendary investor Charlie Munger put it perfectly:

“Show me the incentive and I’ll show you the behaviour.”

For the first time in a long time, the incentives in Ireland are starting to point in the right direction. Lower exit tax, lower CGT and a simple account that handles the tax for you is a very different landscape from the one we were writing about twelve months ago. The challenge now is for Irish savers to act on it — and for the rest of us in the industry to make sure the final legislation lives up to the announcement.

Leaving money on deposit might feel safe, but earning less than inflation means your purchasing power is quietly eroding. That hasn’t changed.

Final Thoughts

Tax may be frightening, but ignoring it is far scarier. With the right planning and advice, you can turn tax season from a source of stress into an opportunity to build long-term wealth.

At Rockwell, we help clients plan proactively, not reactively, so that tax time doesn’t come as a shock. If you’d like to talk through your pension contribution before the 18th November deadline, explore how the new Personal Investment Account and the reduced tax rates might fit into your plans for 2027, or look at using the small gift exemption for your children or grandchildren, we’d love to chat.