# Avoid DIRT Increase with an Interest Up-Front Account



## Lightning (15 Oct 2013)

I think this point deserves its own thread to highlight its importance. 

DIRT is going up to 41% from 1 January 2014. 

This can be avoided by getting paid interest, within 30 days of account opening, for a term deposit that exists into the future. 

In particular, the below accounts now look very attractive. 



> *Permanent TSB: Interest First Savings Account*
> 
> 6 months *2.18%*
> 1 Year *2.45%* ***Highest 1 year rate***
> ...



The above rates could drop at any stage (PTSB have not reviewed rates in a while). Also, as PTSB pay "within a month" of account opening stage, you would need to have the account opened at least a month before the new DIRT rates apply. In a nutshell, it might be worth acting fast.


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## pugsarecool (15 Oct 2013)

*KBC Interest upfront a good bet?*

Hi there,
After PTSB, what is your opinion in terms of the 1-year Fixed Term Deposit with  KBC? I understand they have changed their Terms and Conditions over the summer so  withdrawing all ones funds if needs be is now no longer an option. 
(I'd rather not do one of their variable a/cs given the times that are in it).
Thanks
Pugs


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## tech (15 Oct 2013)

Will we be able to avail of the interest up front with DIRT @ 33% tomorrow I wonder?


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## Lightning (16 Oct 2013)

Firstly, you are better off with a PTSB interest upfront account because it pays more.

Yes, you can still avail of this product tomorrow. DIRT does not increase until 1 January 2014.


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## Delboy (16 Oct 2013)

Any other banks have upfront deposit accounts?


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## jpd (16 Oct 2013)

if possible, you can close the accounts on Dec 31 and reopen a new account on  Jan 1 or 2

Obviously, this is not possible on fixed term or regular savings accounts.

Ask the bank to pay any accrued interest by Dec 31 - some did this a couple of years ago when DIRT increased from 20% to 30%


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## Lightning (16 Oct 2013)

Delboy said:


> Any other banks have upfront deposit accounts?



KBC but at lower rates. 



jpd said:


> if possible, you can close the accounts on Dec 31 and reopen a new account on  Jan 1 or 2



Good point but a lot of banks pay accrued interest on 31 December so no need to do this in a lot of cases.


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## pugsarecool (17 Oct 2013)

*RE:  PTSB, KBC etc.*

Thanks Ciaran for response!  Yes, PTSB are a First deposit when looking at fixed term and safe bet. Still looking at a second and third potential bet. Looks like that's KBC and Ulster
Best wishes
Conservative Pugs


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## Lightning (17 Oct 2013)

No problem. If you are after interest up front, to minimise your tax liability, Ulster Bank do not offer such a product. KBC and PTSB are your only options.


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## kmick (18 Oct 2013)

I had one of those Interest First deposits with PTSB and they charged me DIRT - it cant be that easy guys.


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## DB74 (18 Oct 2013)

kmick said:


> I had one of those Interest First deposits with PTSB and they charged me DIRT - it cant be that easy guys.



The account is to avoid the upcoming *increase* in DIRT, not to avoid it altogether.


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## Lightning (18 Oct 2013)

Exactly. It is about avoiding 2014 DIRT rates and 2015 DIRT rates by paying 2013 DIRT rates on income you will earn in the future! It is legal tax avoidance. 

It can't be said strongly enough, that one needs to act urgently with this. PTSB probably will change these rates sometime in the near future. Also, you need to ensure the payment is made prior to 31 December 2013 and PTSB have a one month lag with the payment.


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## baros (19 Oct 2013)

If Prsi etc is to be paid on savings interest from 2014 - would I be right in thinking the Interest First options from PTSB/KBC are now even more attaractive if you get your accounts opened and interest credited before the end of the year?


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## dub_nerd (19 Oct 2013)

This has been mentioned by CiaranT elsewhere. I appreciate the advice, but we are talking about an 8% increase in DIRT and maybe an additional 4% PRSI if you don't pay it already. That's the percentage saved of an interest rate which itself will be no more than 2% to 2.5%. So total percentage saved is 0.16% to 0.3% ... or €160 to €300 on a €100k deposit, and this is once-off for year one. To me this would completely pale into insignificance compared to the risk of exposing another €100k to a risky Irish operation.


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## Lightning (19 Oct 2013)

Threads merged. 

The amount saved on a 2 year 2 month term deposit, of 100,000 EUR, in tax alone is 704.15 EUR. 

((100000*0.025)*(0.45-0.33))*(26/12) = 704.15 EUR. 

If you factor in the fact that: 
(1) PTSB have the highest rates for this period and 
(2) DIRT might rise again in 2014 and/or 2015 and 
(3) deposit rates may drop further, then the saving is even greater. 

I appreciate your comments about the risk attached to placing a deposit in an institution with an uncertain future but I personally think anything under 100k is low risk.


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## LDFerguson (19 Oct 2013)

Got an e-mail from PTSB saying that the final dates for opening an Interest First account in 2013 are: - 


27th November if they want their interest paid before Christmas and
4th December if they want to have their interest before the end of the year and thus DIRT taxed at 33%
We don't have a deposit agency with KBC so I don't know what their relevant dates are.


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## Lightning (19 Oct 2013)

Thanks for sharing that important information Liam. 

The reality is people may need to act before these dates to get in before any potential PTSB rate cut. 

(I have merged the 2 interest up-front threads).


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## amadain (21 Oct 2013)

CiaranT,

For the sake of another 10 months.

Would it be better to invest the 100k in a NTMA 3 yr Bond - to be purchased in multiples and not in one lump sum as advised - as this is ONLY a further 10 months over the PTSB 2yr 2 months a/c - IF your timeframe is not that exact.


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## Lightning (21 Oct 2013)

Nope, you are better off with PTSB rather than State Savings. 

Lets compare 100k in PTSB versus 100k in State Savings for a comparable period. 

PTSB return:
((100000*0.025)*(1-0.33))*(26/12) = 3,629.17 EUR. 

State Savings return:
((100000*0.0132)*(1))*(26/12) = 2,860 EUR. 

The return is much better with PTSB.


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## Lightning (22 Oct 2013)

PTSB have started an large advertising campaign for this product. The dates in the advertisement are in line with what Liam posted above. 

I am told that there has been a "surge" in applicants for the PTSB Interest First products in recent days.


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## 10amwalker (22 Oct 2013)

I opened a PTSB interest first account today.

I had the necessary documents however was surprised that only certain people in the branch could open the 1 year or 18 month account. 

I would advise if you wish to open one of these accounts you make an appointment with the saving advisor otherwise you may have to wait or come back to open the account.


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## Lightning (22 Oct 2013)

Yeah, a 'trained advisor' has to ask you questions. One can be lucky and they will open the account in the branch if they have time.


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## Lightning (20 Nov 2013)

Above 100k, I would have concerns. 

It seems that many people expect the PTSB survival plan to be approved by the  EC.


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## Lightning (3 Dec 2013)

LDFerguson said:


> [*]4th December if they want to have their interest before the end of the year and thus DIRT taxed at 33%



Reminder time. One needs to act very fast to still get this offer. 

Tomorrow is the last day to open a PTSB Interest First product that pays 2.5% with a 33% DIRT rate. KBC apparently have a similar deadline. 

Also, I think there is a good chance that PTSB and KBC will reduce rates later this week or early next week.


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## Curious (5 Dec 2013)

Ciaran,

As I live abroad the DIRT tax does not concern me. This month (or January(?)) I would like to deposit between 10 000 - 30 000 for a period of 1-5 years which I will not have to touch during this period. As I already have a Term Deposit Account with PTSB I will probably make the new deposit with them. I see their rates today are as follows (below). What would you advise? Many thanks in advance. 
Interest First (26 Months)
e5,000 - e9,999.99  4.38 - 4.38 - 2.08
e10,000 +  5.28 - 5.28 - 2.50

Fixed Access (5 Year)
e5,000+ 11.75 11.75 2.25


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## Lightning (8 Dec 2013)

Curious said:


> Ciaran,
> 
> As I live abroad the DIRT tax does not concern me. This month (or January(?)) I would like to deposit between 10 000 - 30 000 for a period of 1-5 years which I will not have to touch during this period.



Will PTSB allow non-residents open term deposit accounts at the above rates? 

I would think that your first step would be to ring around and see which products are open to non-residents. A lot of deposit products are not available to non-residents.


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## Curious (12 Dec 2013)

Yes. As a non-resident, I have a 21 day reg saver, Interest First, and Fixed Term Dep. accounts with PTSB.


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## drag0n (12 Dec 2013)

Curious said:


> Yes. As a non-resident, I have a 21 day reg saver, Interest First, and Fixed Term Dep. accounts with PTSB.


 
Do PTSB know you are a non-resident? Acording to their site you must be a resident for all of the above account types.


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## Curious (16 Dec 2013)

Yes they know I am non-resident as I had to provide proof of my address.


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## Lightning (16 Dec 2013)

Curious said:


> Yes they know I am non-resident as I had to provide proof of my address.



Where you non-resident when you opened the account at the start? or did you become non-resident post account opening?


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## Curious (17 Dec 2013)

Yes, non-resident from the start. As the interest rates, generally, in Europe are almost non-existent, I wondered why the "Irish banks" did not make these rates more commonly known outside of Ireland in order to bring in some investment(?).


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## Lightning (17 Dec 2013)

Very surprising that PTSB let you open an account when the T&C's do not allow non-residents. 

Yeah, when the Irish banks were desperate for deposits, and they all still need more deposits, it was surprising that they did not open more deposit products to non-residents.


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## amadain (30 Jan 2014)

PTSB return(100000*0.025)*(1-0.33))*(26/12) = 3,629.17 EUR. 
State Savings return: ((100000*0.0132)*(1))*(26/12) = 2,860 EUR.

THANK YOU CiaranT,

Went with the PTSB account.

What is the current calculation (for the two year product - as 2year2months product discontinued - considering the higher rates of DIRT, and also now PRSI ?).

Thanks Again.


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## Lightning (30 Jan 2014)

Glad it was of help. 

Are you eligible to pay PRSI? You will only pay PRSI if you have unearned income over 3,174 EUR per year. 

The calculation is the following if you pay PRSI:
(DEPOSIT*0.024)*(1-0.45))*(24/12) = PTSB Interest.


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