A Section 73 Policy is a strategic savings plan under Irish tax law that enables parents, grandparents, and estate owners to pass assets to loved ones during their lifetime, offsetting the burden of gift tax. The plan must be held for at least eight years and is specifically endorsed to qualify for tax benefits, allowing the proceeds to be used directly to pay Capital Acquisition Tax on gifted assets. This tool is designed for high-net-worth individuals looking to minimise tax liabilities, future-proof their family’s wealth, and make the transfer of property or cash smoother and more tax-efficient.
Section 73 Policy Savings Plan (Ireland)
A savings plan specifically tailored towards gifting assets to family members tax-efficiently in the future.
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.
Related read: Section 73 Policy Ireland – Tax Efficient Inheritance Planning.
Section 73 Plan vs. Regular Savings Plan
Traditional Savings Plan
Let’s say you save €100,000 and later gift it to your child.
Ready to protect your family’s financial future? Book a consultation now to discuss the best savings strategy for your estate.
Here’s the catch:
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.
Want to gift assets tax-efficiently? Enquire now to learn about Section 73 Policy options for a smoother transfer to loved ones.
Section 73 Savings Plan
Save the same €100,000 using a Section 73 investment policy.
Recommended: Section 72 Policy: Your Secret Weapon To Grow Wealth And Minimize Tax Burden.
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.
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.
You might also like our post on How Small Gift Exemption Savings Plans Can Minimise Inheritance Tax For Children And Grandchildren.
Frequently Asked Questions (FAQs)
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.
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.
Uncertain about your inheritance plan? Book a consultation now for expert Section 73 investment advice and future-proof your legacy.
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.
Curious about minimising the gift tax burden? Enquire now to discover tailored Section 73 Policy savings plans in Ireland. Related read: Inheritance Tax Ireland – How To Reduce Your 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 Help Families Bypass Inheritance Tax Barriers.
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
The Section 73 Policy Savings Plan is a powerful strategy for those wishing to pass on their wealth to the next generation in a tax-efficient manner. By understanding the intricacies of this policy, you can navigate the complexities of gift tax laws and find ways to lighten the tax burden for your loved ones. This insurance savings plan offers unique advantages over regular savings plans, especially when it comes to minimising future liabilities.
Implementing a strategic approach with Section 73 can significantly reduce the financial stress associated with transferring assets. Whether you’re an individual considering gifting large sums or a financial advisor seeking to guide clients through taxation worries, this policy provides clarity and confidence. Empower yourself with knowledge about Section 73 today, and pave a smoother path for your family’s financial future.
To truly maximise the benefits, seek out professional guidance tailored to your specific circumstances. At Money Maximising Advisors, we can help you craft a savings plan that aligns with your long-term goals, ensuring both security and generosity in equal measure.
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