As in 2013, in 2015 it is possible to terminate the life-course savings scheme and pay tax on just 80% of the balance. The life-course savings scheme was discontinued on 1 January 2013, but anyone who had a life-course savings balance of €3,000 or more at that time was permitted to retain the balance until 31 December 2021 at the latest (contributions to the life-course savings scheme were no longer possible from 2013 onwards). In the period up to the end of 2021, participants may decide for themselves what amounts to withdraw from their life-course savings balance. Naturally, income tax must be paid on every withdrawal.
In order to encourage as many participants in life-course savings schemes as possible to opt out of the scheme, the discount mentioned above was offered in 2013. The Government is making a second attempt in 2015 to phase out as many life-course savings schemes as possible.
PLEASE NOTE: the discount applies only to the life-course savings balance as at 31 December 2013. To the extent that the balance is higher on 31 December 2015 (due to returns achieved), it will be taxed under the 100% scheme.
The life-course leave allowance may be deducted from the income tax due. This amounts to €207 for each year in which contributions were made to the life-course scheme up to and including 2011. Naturally, the life-course leave allowance can only be claimed once.
If you wish to take advantage of the discount, you must withdraw your entire life-course savings balance in 2015 in a single lump sum. As a result, the entire balance will be included in one go in your income subject to income tax for 2015. Whether this is advantageous depends on your personal circumstances. After all, the income tax rate increases as your taxable income rises.
It is also important to note that your life-course savings balance is not subject to income tax under Box 3 (income from savings and investments). Once the life-course savings scheme has ended, you will, however, be liable for capital gains tax on the balance remaining after tax has been deducted.