Section 73 Policy Ireland is a Revenue-approved savings plan that enables parents, grandparents, or any individual with significant assets to give large gifts or property to loved ones while minimising hefty inheritance or gift tax liabilities. By saving into a Section 73 investment plan over at least eight years, future gift tax (GTL) can be paid from the plan’s proceeds, making it easier for families to pass assets on without large tax outlays. This strategic financial tool is ideal for high-net-worth families seeking estate planning solutions that protect their legacy and empower the next generation.
What Is a Section 73 Policy?
A Section 73 Policy Savings Plan is a strategic savings plan designed for individuals who want to pass assets, such as property or cash, to loved ones during their lifetime without leaving them with a heavy tax bill. Approved under Section 73 of the Capital Acquisitions Tax Consolidation Act 2003 (CATCA), this policy allows parents, grandparents, or any individual with a significant estate to save regularly into a tax-efficient investment plan. Once the policy has been active for at least eight years, the accumulated funds can be used to pay the gift tax liability (GTL) that arises when assets are transferred to a child or beneficiary. It’s a forward-thinking financial strategy that ensures your generosity doesn’t come with unintended tax consequences for your family. Many high-net-worth families use Section 73 investment plans as part of long-term inheritance tax planning.
Who Should Consider a Section 73 Policy?
- Parents and Grandparents: With significant assets, who want to gift property, cash, or shares during their lifetime. These individuals often seek expert Section 73 investment advice to structure their estate wisely.
- Estate Owners: Who want to minimise the tax impact on the next generation when transferring wealth. This includes those considering Section 73 policy inheritance tax implications.
- Spouses or Civil Partners: Acting jointly, since the policy must be held by those who are giving the gift, and lives assured must be the same as the policyholders. This ensures compliance under Section 73 Income Tax Act regulations.
Section 73 Plan vs. Regular Savings Plan
Traditional Savings Plan:
Let’s say you save €100,000 and later gift it to your child. If your child’s tax-free lifetime threshold (€335,000) has already been used, they may face a 33% tax liability. That’s €33,000 lost to tax, leaving them with just €67,000.
Section 73 Savings Plan:
Save the same €100,000 using a Section 73 investment policy. If you later gift a property worth €350,000, triggering a gift tax bill of €115,000, the full €100,000 from your policy can be used to cover most of the liability. Your child receives the property without the financial burden.
Ready to future-proof your family’s finances? Book a consultation and explore how a Section 73 policy can benefit your estate.
You might also like our post on How To Use A Section 73 Savings Plan In Ireland To Avoid Inheritance Tax.
Why It Matters:
Giving should feel rewarding, not worrisome. A Section 73 Policy allows you to:
- Give with peace of mind
- Protect your legacy
- Empower the next generation
It’s more than a savings plan. It’s a tool to future-proof your family’s financial well-being — one of the most powerful savings plans in Ireland for intergenerational wealth transfer.
Start planning for gifts without tax worries. Book a Section 73 consultation now to learn about inheritance tax solutions.
Related read: Section 73 Policy: Tax Efficient Savings And Investments For Gifting Wealth In Ireland.
Frequently Asked Questions (FAQs)
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What happens if I no longer wish to use the policy for gift tax relief?
You are under no obligation to use the proceeds of your Aviva Savings Plan policy that has been endorsed under Section 73 of CATCA 2003 for the payment of gift tax. It is simply an option available if all Revenue-qualifying conditions have been complied with.
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What if I act outside of the qualifying conditions of Section 73?
You are under no obligation to use the proceeds of your Aviva Savings Plan policy that has been endorsed under Section 73 of CATCA 2003 for the payment of gift tax. It is simply an option available if all Revenue-qualifying conditions have been complied with.
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Does the exit tax apply to my savings plan endorsed under Section 73?
Yes, the exit tax will apply if there is any investment gain on your Section 73 policy.
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How long do I have to fund my policy to qualify for Section 73 relief?
You must pay premiums into your policy for a minimum of 8 years. If annual premiums cease to be paid in the first 8 years, the policy will cease to be in a form approved by Revenue for Section 73 relief.
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Once I encash my policy, what happens next?
If you wish to use the proceeds of your policy for Section 73 policy inheritance tax relief, you have one year to pay the gift tax liability. The gift should be made as soon as possible after the policy proceeds have been encashed. The proceeds of an Aviva Section 73 Savings Plan policy will not qualify for relief on the payment of inheritance tax.
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Can an existing savings policy become a Section 73 policy?
No, you must take out a new policy. To qualify for Section 73 policy savings plan relief, the policy must be specifically endorsed under Section 73 of CATCA 2003 from the date of commencement.
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What happens if I die before the minimum 8-year term?
If you die before the minimum 8-year term or before the gift tax liability is paid, then the proceeds of the policy will form part of your estate.
Conclusion
Drawing from the insights shared in this blog, it’s clear that understanding Section 73 Policies is crucial for effective inheritance tax planning. We’ve explored the various reasons why individuals should consider these policies, including the potential tax benefits and strategic advantages they offer for passing on wealth to loved ones. From identifying who can benefit most from a Section 73 Policy to comparing traditional savings plans, the landscape of wealth transfer is complex but navigable with the right information.
To truly maximise your inheritance and minimise potential tax liabilities, it’s essential to integrate a Section 73 Policy into your financial planning. This not only ensures a smoother transition of assets but also provides peace of mind knowing that your loved ones will receive the full benefit of your legacy without undue financial burden. At Money Maximising Advisors, we are committed to helping you navigate the complexities of inheritance tax planning with tailored solutions designed to fit your unique needs.
The journey to secure and efficient wealth transfer begins with a strategic approach. By understanding and utilising Section 73 Policies, you can take proactive steps to protect your assets and ensure a lasting legacy for future generations. To embark on this journey with confidence and clarity, reach out to us at Money Maximising Advisors. Let us guide you towards a brighter financial future through informed Section 73 inheritance planning.
