A Section 73 Policy is a Revenue-approved savings plan that empowers Irish parents, grandparents, and estate owners to gift assets or wealth with reduced inheritance tax liability. By saving consistently for 8 years, families can use the matured funds to settle gift tax liabilities, ensuring the next generation is not financially burdened. Section 73 becomes an essential estate planning tool, offering tax-efficient wealth transfer, particularly for those with significant assets. It facilitates seamless financial support and inheritance while minimising the impact of taxation.
Section 73 Policy Savings Plan: Gifting, Saving & Inheritance Tax
Benefits Summary:
- Save and pay future gift tax without burdening your loved ones
- Reduce future gift tax liabilities by 33% when assets are passed on
- Pass on wealth while you’re alive – tax-efficiently
- Use a Revenue-approved plan to reduce Capital Acquisition Tax
- Ideal for high-net-worth parents and grandparents
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. You might also like our post on How To Use A Section 73 Savings Plan In Ireland To Avoid Inheritance Tax.
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.
Considering a Section 73 Policy? Enquire now to discover tax-saving benefits for future gifting.
Related read: How A Section 73 Policy Can Reduce Inheritance Tax In Ireland.
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.
Ready to discuss your estate planning options? Book a consultation today and start your financial journey.
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.
Recommended: Section 73 Policy Ireland – Tax Efficient Inheritance Planning.
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.
Frequently Asked Questions (FAQ’s)
1. 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. You might also like our post on Understanding The Tax Implications Of Section 73 Policy In Ireland.
2. 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.
Want to learn more about tax-efficient savings? Book a consultation with our experts now.
3. 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.
Looking to secure your family’s inheritance? Enquire now for expert advice on Section 73 Policies.
Related read: Section 72 Policy: Your Secret Weapon To Grow Wealth And Minimize Tax Burden.
4. 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.
5. 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.
Recommended: How Small Gift Exemption Savings Plans Can Minimise Inheritance Tax For Children And Grandchildren.
6. 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.
7. 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
Understanding how to manage and transfer wealth effectively is a vital part of long-term planning for many individuals. The Section 73 Policy Savings Plan stands as a strategic approach designed to address those concerns, allowing you to navigate gifting, saving, and inheritance tax challenges with confidence. By leveraging this unique tool, you can provide significant financial benefits to your loved ones while minimising the potential tax burdens that often accompany wealth transfers.
For anyone considering how best to pass on assets or make substantial gifts during their lifetime, the Section 73 Policy Savings Plan offers clarity and options tailored to diverse circumstances. Whether you are a parent, grandparent, or estate owner seeking effective ways to maintain your family’s legacy, understanding these policies is essential. With proper guidance and a thoughtful approach, you can ensure that your intentions not only preserve wealth but also foster future opportunities for those who matter most.
To achieve success in your financial planning journey, consult with a knowledgeable advisor who understands the nuances of the Section 73 Policy Savings Plan. With professional insight, you can develop a personalised strategy tailored to your unique goals and circumstances. Money Maximising Advisors is here to guide you every step of the way, helping you make informed decisions that safeguard your wealth and empower your family’s future.
Contact us to start your journey towards financial security and peace of mind today.
