BY JOHN ELLIS, FINANCIAL ADVISOR
We are nearly halfway through the year and before we know it Budget 2026 will be upon us. Pre-Budget submissions are being, and have been prepared, on behalf on many bodies who wish to influence Government decisions when it has come to the Budget.
Brokers Ireland which is the voice for over 1,200 insurance and financial broker firms has tabled a Pre-Budget Submission calling for sweeping reforms to taxation, pensions and housing policy.
With €178 billion sitting in bank deposits earning next to nothing by way of interest, the group argues that decisive action is needed to boost retail investment, ensure pension equity, and unlock housing supply. In conjunction with the EU’s Savings and Investment Union (SIU) and Capital Markets Union (CMU), these proposals use the October 2024 Funds Sector Review to “address market distortions and enhance consumer outcomes”.
A cornerstone of the submission is the immediate abolition of the 1% Life Assurance Levy, introduced in 2009 as a “temporary” measure. This tax, unique to life assurance policies, removes €33 million annually from investors reducing returns by roughly 0.2% a year. Unlike bank deposits or collective investment funds, which face no equivalent charge, the levy distorts the market and penalises savers. The Funds Review endorses its repeal, and Brokers Ireland insists there is no justification for delay, urging its removal from Budget 2026 to level the investment playing field.
To stimulate capital market participation, the group proposes an Individual Savings Account (ISA), allowing tax-free investments up to €20,000 annually. Like the UK’s successful ISA, this would “redirect savings from dormant deposits into higher-yielding assets like infrastructure or sustainable funds offering inflation-resilient returns and stronger retirement provisions”.
Taxation reform extends to the Life Assurance Exit Tax (LAET), currently at 41% on gains, compared to the 33% Capital Gains Tax (CGT) for direct investments like shares or property. Brokers Ireland are calling for the alignment of LAET with CGT, scrapping the eight-year deemed disposal rule, and allowing losses on one policy to offset gains on another.
This would harmonise treatment across investment types, reducing complexity and encouraging savings. Additionally, a 25% LAET rate for ESG-compliant funds, certified under the EU’s Sustainable Finance Disclosure Regulation, aims to boost sustainable investment.
Pension reforms are equally ambitious. While welcoming the planned increases to the €2 million Standard Fund Threshold (SFT), Brokers Ireland highlights inequities between public and private sectors. Public servants can spread chargeable excess tax (CET) over 20 years while private workers face upfront payments. It is proposed to extending the 20-year option to private pensions or offer a discounted CET rate for immediate payments.
It also wants to see an encashment option, like to the public sector’s S787TA, allowing private workers to cash out excess pension benefits without triggering SFT penalties.
The €115,000 Net Relevant Earnings (NRE) limit for pension tax relief, unchanged since 2011, restricts self-employed savers. Brokers Ireland urges indexing it to SFT increases, starting at €126,500 in 2026, to ensure equitable access to tax relief.
On housing, an offset scheme is proposed to targets older homeowners living in oversized properties. By allowing rent paid on a smaller rental to offset rental income from their home for tax purposes, this could free up larger homes, easing Ireland’s housing shortage.
Further proposals include retaining the 30% tax on inherited Approved Retirement Funds (ARFs) to avoid punitive double taxation and permitting joint-name ARFs to simplify transfers for surviving spouses.
These reforms promise to enable savers, promote sustainability and address housing pressures, yet fiscal costs and political hurdles loom large. As the Budget approaches, the Government must seize this chance to align Ireland with EU financial trends and deliver real benefits for us all large and small alike.
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