Finance Act 2025
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Automatic enrolment retirement savings system | ||
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16. Part 30 of the Principal Act is amended by the insertion of the following Chapter after Chapter 2D: | ||
“CHAPTER 2E | ||
AUTOMATIC ENROLMENT RETIREMENT SAVINGS SYSTEM | ||
Interpretation (Chapter 2E) | ||
787AE. In this Chapter— | ||
‘Act of 2024’ means the Automatic Enrolment Retirement Savings System Act 2024 ; | ||
‘AE provider scheme’ has the same meaning as it has in the Act of 2024; | ||
‘Authority’ has the same meaning as it has in the Act of 2024; | ||
‘balance’ has the same meaning as it has in Part 5 of the Act of 2024; | ||
‘contributing participant’ has the same meaning as it has in the Act of 2024; | ||
‘contribution’ has the same meaning as it has in the Act of 2024; | ||
‘emoluments’ has the same meaning as it has in Chapter 4 of Part 42; | ||
‘employee’ has the same meaning as it has in Chapter 4 of Part 42; | ||
‘employer’ has the same meaning as it has in Chapter 4 of Part 42; | ||
‘employer contribution’ has the same meaning as it has in the Act of 2024; | ||
‘participant’ has the same meaning as it has in the Act of 2024; | ||
‘participant account’, in relation to a participant, means the account maintained for the participant by the Authority under section 76 of the Act of 2024; | ||
‘personal representative’ has the same meaning as it has in Part 5 of the Act of 2024; | ||
‘State contribution’ has the same meaning as it has in the Act of 2024; | ||
‘unit’, in relation to an AE provider scheme, has the same meaning as it has in Part 4 of the Act of 2024. | ||
Allowance to employer | ||
787AF. (1) For the purposes of this section, ‘chargeable period’ means an accounting period of a company or a year of assessment. | ||
(2) Subject to subsection (3), any employer contribution in respect of a contributing participant shall, for the purposes of Case I or II of Schedule D and of sections 83 and 707(4), be allowed to be deducted as an expense, or expense of management, incurred in the chargeable period in which the sum is paid but no other sum shall for those purposes be allowed to be deducted as an expense, or expense of management, in respect of the making, or any provision for the making, of any such contributions. | ||
(3) The amount of an employer contribution which may be deducted under subsection (2) shall not exceed the amount contributed by that employer to the Authority in respect of an employee in a trade or undertaking in respect of the profits of which the employer is assessable to income tax or corporation tax, as the case may be. | ||
Repayments to employer | ||
787AG. Where a repayment of employer contributions is made or becomes due to an employer under section 64 of the Act of 2024 as a result of an overpayment of contributions to the Authority, the repayment shall be treated for the purposes of the Tax Acts as a receipt of that trade or undertaking receivable when the repayment is due or on the last day on which the trade or undertaking is carried on by the employer, whichever is the earlier. | ||
Exemption of AE provider schemes | ||
787AH. (1) Exemption from income tax shall, on a claim being made in that behalf, be allowed in respect of income derived from investments or deposits of assets held in an AE provider scheme if it is income from investments or deposits held for the purposes of the scheme. | ||
(2) (a) In this subsection, ‘financial futures’ and ‘traded options’ mean, respectively, financial futures and traded options for the time being dealt in or quoted on any futures exchange or any stock exchange, whether or not that exchange is situated in the State. | ||
(b) For the purposes of subsection (1), a contract entered into in the course of dealing in financial futures or traded options shall be regarded as an investment. | ||
(3) Exemption from income tax shall, on a claim being made in that behalf, be allowed in respect of underwriting commissions if the underwriting commissions are applied for the purposes of the AE provider scheme and in respect of which the Authority would, but for this subsection, be chargeable to tax under Case IV of Schedule D. | ||
(4) (a) A unit in an AE provider scheme is not an asset of a pension fund for the purposes of Chapter 1A of Part 27. | ||
(b) For the purpose of this subsection, a unit referred to in paragraph (a) includes a unit (within the meaning of section 739B) in an investment undertaking (within the said meaning) held by a participant. | ||
Taxation of payments from automatic enrolment retirement savings system | ||
787AI. (1) Subject to subsections (2) and (3)— | ||
(a) the payment of the balance from a participant account, after any lump sum withdrawn in accordance with subsection (3)(a), shall, notwithstanding anything in section 18 or 19, be treated as a payment to the participant of emoluments to which Schedule E applies and, accordingly, the provisions of Chapter 4 of Part 42 shall apply to any such payment or amount treated as a payment, and | ||
(b) the Authority shall deduct tax from the balance held in that participant’s account at the higher rate for the year of assessment in which the balance is made available unless the Authority has received from the Revenue Commissioners a revenue payroll notification (within the meaning of section 983) for that year in respect of the participant. | ||
(2) The Authority shall be liable to pay to the Collector-General the income tax which the Authority is required to deduct from any balance withdrawn by a participant by virtue of this section and the individual beneficially entitled to the balance withdrawn by that participant from their participating account, including the personal representatives of a deceased individual who was so entitled prior to the individual’s death, shall allow such deduction; but where there are no funds or insufficient funds available out of which the Authority may satisfy the tax required to be deducted, the amount of such tax for which there are insufficient funds available shall be a debt due to the Authority from the individual beneficially entitled to the balance held in the participant account or from the estate of the deceased individual, as the case may be. | ||
(3) Subsection (1) shall not apply where the balance from a participant account is— | ||
(a) an amount made available, at the time the balance of the participant account is first made available to the participant, by way of lump sum (in accordance with section 83(1)(a) of the Act of 2024) not exceeding 25 per cent of the value of the balance at that time, or | ||
(b) an amount made available to the personal representatives of the participant following the death of the participant and before the giving of a notification under section 82(1)(d) of the Act of 2024 by the Authority. | ||
(4) (a) Where the payment of the balance referred to in subsection (1) is made following the death of the participant who was prior to death beneficially entitled to the assets of the participant account, the amount of the funds shall be treated as the income of that participant for the year of assessment in which that participant dies and, subject to paragraph (b), subsection (1) shall apply accordingly. | ||
(b) Subsection (1) shall not apply to a payment made of the balance following the death of the participant, where the giving of a notification under section 82(1)(d) of the Act of 2024 by the Authority is made to— | ||
(i) a spouse or civil partner of the participant, or | ||
(ii) any child of the participant or any child of the spouse or civil partner of the participant. | ||
(c) Where, in a case referred to in paragraph (b), the payment of the balance is made to a person who had attained the age of 21 years at the date of death of the participant beneficially entitled to the assets in the participant account, the Authority shall deduct income tax from the distribution under Case IV of Schedule D at a rate of 30 per cent, and— | ||
(i) the amount so charged to tax— | ||
(I) shall not be reckoned in computing total income for the purposes of the Tax Acts, and | ||
(II) shall be computed without regard to any amount deductible from, or deductible in computing, total income for the purposes of the Tax Acts, | ||
(ii) the charging of the balance in such manner shall be without any relief or reduction specified in the Table to section 458, or any other deduction from that distribution, and | ||
(iii) section 188 shall not apply as regards the amount so charged. | ||
(d) Where the Authority deducts tax in accordance with paragraph (c), subsections (8) to (15) of section 790AA shall, with any necessary modifications, apply as if any reference in those subsections— | ||
(i) to the administrator were a reference to the Authority, and | ||
(ii) to an excess lump sum were a reference to the balance of a kind referred to in paragraph (c).”. |