Confidence drops over retirement provision

Almost one in two people are concerned that they are financially unprepared for retirement, according to a savings and investment index from the Bank of Ireland and the Economic and Social Research Institute.

The Retirement Optimism reading dropped sharply to 99 in November from 105 in September.

It is part of an overall Savings and Investment index compiled by the two bodies, using a minimum of 800 people, which saw a rise to 100 from a reading of 99 as the stock market carnage of October ebbed.

“The drop in confidence around retirement provision is significant and just half of respondents feel financially prepared for retirement,” said Tom McCabe of Bank of Ireland Investment Markets.

Separately, Standard Life warned proposals calling for a halving of income tax relief on pensions for middle-income earners to 20pc or reducing it to 25pc would be calamitous for private sector workers.

The company submitted its findings to the Interdepartmental Pensions Reform and Taxation Group, which is expected to report by the end of the year.

“We anticipate the exact opposite – ie a mass exodus of those who consider reduced pension tax benefits unattractive and reduce their pension saving accordingly,” said Michael McKenna, managing director of Standard Life Ireland.

“The squeezed middle might feel this is a bridge too far following the post-financial crash hardships endured.”

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Irish firms struggle with digital transformation to meet customer demands – new index

A quarter of Irish businesses will struggle in terms of digital transformation in meeting evolving customer demands within five years, a newly launched index has shown.

Dell Technologies Digital Transformation Index (the DT Index), completed in collaboration with Intel, benchmarks 4,600 businesses across 42 countries across the globe.

The study revealed that an overwhelming majority (93pc) of business leaders in Ireland believe that their firms are facing major challenges when it comes to digital transformation.

Top barriers were cited by respondents as lack of budget and resources; data privacy and cybersecurity; lack of the right in-house skills; lack of senior leadership; and a lack of alignment and collaboration across the company.

The DT Index, which acts as a barometer of the digital sentiment across the landscape, also highlighted that just 7pc of firms here consider themselves digital leaders.

Vice-President and General Manager, Dell EMC Ireland said Aisling Keegan said that the next digital era has arrived and it’s reshaping the way we live, work and conduct business in Ireland.

“With only 7pc of Irish businesses considering themselves as digital leaders, there is an urgent need for digital transformation to become the number one business priority,” she said.

In terms of conquering their challenges, a number of Irish companies are using digital tech for growth, developing in-house skills and building privacy into all devices – but progress remains slow.

However, the index showed that firms are also turning to emerging technologies and cybersecurity to assist with their digital transformation within the next three years.

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Time to check if you’re due a tax allowance windfall

Tax reliefs could be worth thousands a year to workers, but many forget to claim them, or don’t realise they can.

Time is running out for workers to claim a valuable tax refund they may be entitled to. There is a four-year limit on how far back you can claim tax refunds – and so this New Year’s Eve marks the last day that you can claim any tax relief you’re entitled to for 2014.

Tax reliefs could put hundreds, perhaps thousands, back into your pocket – so it’s important to claim them.

Even if you don’t believe you’re due a tax refund for 2014, it’s worth reviewing your expenses and tax credits for 2014 and subsequent years as you could be entitled to tax back. People often overlook, and forget to claim, tax reliefs – and in doing so, lose out on their chance for a tax windfall.

Medical bills relief
One tax break which people often forget to claim, or fail to claim in full, is the tax relief on medical expenses, according to Norah Collender, tax technical manager at Chartered Accountants Ireland. Under that tax break, you can claim back a fifth of the cost of certain medical bills in tax relief.

Many of us already know that you can get tax relief on the cost of a visit to a doctor or consultant – as well as for any drugs or medication which they supply or prescribe. The range of health expenses which you can claim tax relief on however is quite broad – so you may have paid out for an expense which you don’t expect to be eligible for the relief, but which actually is. For example, you can get tax relief on the cost of exercise bikes, wheelchairs and wheelchair lifts, and wigs – as long as these items are medically necessary and used on the advice of a practitioner. You can get tax relief on IVF, acupuncture or treatment from a psychologist or psychotherapist – as long as certain conditions are met.

“One expense which people might forget to claim tax relief on is the cost of special dietary food,” said Collender. “If you have a medical condition which requires you to be on a special diet, such as if you are coeliac, you can claim tax relief on that. Also, a lot of children are experiencing learning difficulties. The cost of a child’s educational psychologist or speech and language therapist qualifies for tax relief – as long as the practitioner is registered.”

Should you be a kidney patient or have a child who requires ongoing medical attention, check that you are getting all the tax relief that you entitled to. Parents for example may be entitled to tax relief on the cost of their own overnight accommodation – if that overnight stay was necessary for their child’s hospital treatment. Parents may also be entitled to tax relief for the cost of transporting their child to and from hospital, and for their own transport costs when visiting their child.

Even if your private health insurer covers a certain amount of your medical bills, you may still be entitled to claim tax relief on expenses which you haven’t been reimbursed for.

“Private health insurance often doesn’t cover the cost of prescriptions,” said Collender. “There’s also typically a lot of caps on the expenses which a medical insurer will cover. So remember to keep a record of any medical expenses which your medical insurer doesn’t reimburse you for – and to make a claim for those un-reimbursed expenses.”

As well as claiming tax relief on medical expenses incurred in 2014 by the end of this year, you can also claim relief for 2015, 2016 and 2017. However, you must wait until 2018 has ended before you claim tax relief on medical expenses incurred in 2018.

Flat-rate expenses
Next year could be the last year that you will be entitled to claim flat-rate employment expenses for. These flat-rate expenses, which are essentially tax relief you can get to cover the cost of expenses incurred when carrying out your work, could be worth a few hundred – and some cases, a few grand – to you a year.

A number of flat-rate expenses are however set for the chopping board from January 2020, including those for shop assistants, journalists in employment, and cardiac technicians. This is due to an ongoing review by the Revenue Commissioners into expense-related tax reliefs. This review will be completed by the end of 2019 – with January 1, 2020 set to be the date for any changes introduced under this review to kick in. More than 80,000 employees are expected to lose out as a result of this review.

“Now is a good opportunity for people to consider if they qualify for flat-rate expenses – and to make a claim for flat-rate expenses they’re entitled to for the last four years,” said Collender. “People who are new to a profession should find out any flat rate expenses they’re entitled to as they may not be aware these are available.”

Remember, should you lose your flat-rate expense allowance from 2020, you can still claim back the cost of any work-related expenses – but you will need to make this claim yourself, and provide receipts when doing so.

Tax credits check
Now is a good time to check if you have got all the tax credits you were entitled to since 2014. Tax credits reduce the amount of tax you pay so be sure to claim all the ones you’re entitled to.

“People often forget that the home carer credit is available – or they may not realise they’re entitled to it,” said Collender. “You don’t need to be living with the person you’re looking after to be able to claim the credit.”

The home carer tax credit, which is currently worth €1,200 a year, can be claimed by married couples or civil partners who care for one or more dependent people. (It cannot be claimed if the dependent person is your spouse or civil partner.)

Married couples and civil partners however should do their maths here – particularly if both spouses are earning. “It may work out better tax-wise to forgo the home carer’s tax credit,” said Collender. “You cannot claim both the home carer tax credit and the increased tax rate band. You should claim whichever is more beneficial for the family.” (The increased tax rate band allows married couples who are both working to pay the standard rate of income tax on up to €70,600 of income, rather than on up to €44,300 of income if only one spouse is working).

You may be due a tax refund if you did not receive the right tax credits in a given year – or if more of your income was taxed at the higher rate of income tax than should have been the case.

Always check your tax credits and tax bands (the bands which determine how much of your income is taxed at 20pc – and how much is taxed at 40pc) if there has been a change in your personal circumstances in recent years.

“If you get a special social welfare payments in a given year, check back over your payslips and do a calculation at the end of that year to see if you were properly taxed or if you are due a refund,” said Collender. “For example, if you go on maternity leave, there is an adjustment made to your tax credits and bands – it can happen that the adjustments made may not be correct.”

Married couples, who are jointly assessed for tax, should check how the tax credits and rate bands are split between them – particularly if one spouse is self-employed and the other spouse is a PAYE worker. “One spouse might be getting the full €44,300 of his or her income taxed at the 20pc rate – or the tax credits might not be divided equally among both spouses,” said Collender. “This means one spouse might be carrying more of the tax burden for the couple than they should. The person taxed through the PAYE system should have a look at their tax credits and rate band and see how they’ve been allocated.”

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Some 50,000 customers are left with worthless insurance

Up to 50,000 Irish insurance customers have been left with no guarantee of cover after an underwriting company shut down.

Danish company Qudos has gone into liquidation, with payouts on claims being put on pause.

It means that Irish customers’ cover with the firm is essentially worthless, and those awaiting payment of a claim from Qudos could be left on the hook.

Thousands more whose insurance is underwritten by Qudos will need to move quickly to find new policies.

Read more: Q&A: Check to see if you’re covered by Danes – and move quickly if you are
The Central Bank of Ireland said it “strongly” recommended that Qudos customers seek alternative cover. The situation will inevitably raise fears that insurance customers will be hit with levies to cover unpaid claims – as seen with the collapses of Setanta Insurance or Quinn Insurance.

As it stands, it is not yet clear whether Qudos will be able to pay outstanding insurance claims.

If it turns out unpaid claims will not be settled, Irish customers will have to look for compensation if they don’t want to pay for the cost of the claims themselves.

Liquidators who now control the company, and whose job it is to secure as much money as possible for Qudos’s creditors, said they expect to provide a further update within one or two weeks.

Both Denmark and Ireland have dedicated funds for paying claims of liquidated insurers, and both are potential options depending on how the matter progresses.

Read more: Q&A: Check to see if you’re covered by Danes – and move quickly if you are
The Central Bank is engaging with the Danish authorities, according to the Department of Finance.

It added that it “may take a number of weeks to establish the extent and nature of the insolvency”.

Qudos provided services in Ireland through insurance brokers.

It primarily operated in the motor, household and logistics and haulage markets.

Patrona, an Irish insurance company who provided administration services for Qudos here, said it has offered alternative insurance products to brokers. The brokers can pass these on at no extra cost to policyholders.

The Qudos liquidators are unlikely to be able to provide refunds.

Patrona said: “In relation to claims, we have not received any formal instructions from the liquidator at this stage other than advice on the Qudos website today which states that claims will not be paid for one to two weeks.

“We can only assume at this stage that this is for administrative reasons while the liquidator evaluates the Qudos position and puts the necessary infrastructure in place,” it added.

Patrona acknowledged the wait was “very frustrating for policyholders” and said that “as soon as we have more information we will be advising our brokers immediately”.

Qudos is not the first insurance company operating in Ireland, but regulated elsewhere in Europe, to go into liquidation.

Setanta Insurance was regulated in Malta, while Enterprise Insurance, whose collapse also affected Irish customers, was regulated in Gibraltar.

On the matter of “passporting”, Insurance Ireland, a representative group for the insurance industry here, said it “strongly supports a well-functioning cross-border insurance market where customers can avail of insurance cover across the European Union”.

“But this must be underpinned by consistent regulation to protect the interests of customers,” it added.

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Renters will soon be able to find out how much previous tenants charged

Renters will be able to know what a previous tenant was paying for a room under laws to be brought to Cabinet next week.

Housing Minister Eoghan Murphy has indicated he can overcome legal challenges to set up a ‘rent register’.

It would allow people looking to rent a room see the average prices in a certain location.

The move is among a suite of measures aimed at clamping down on unscrupulous landlords who are taking advantage of loopholes in the current system.

Mr Murphy also plans to introduce fines for landlords who breach the limitations imposed by the ‘Rent Pressure Zones’ (RPZs).

Prices in the RPZs cannot be hiked by more than 4pc in a year but there is anecdotal evidence that the restriction is being flouted. A figure of €15,000 has been suggested as a suitable fine for a landlord who pushes up rent by a larger amount. And the minister is to double the notice period for tenants facing eviction.

Speaking yesterday, Mr Murphy said he wants to “better enforce rent caps” and allow the Residential Tenancies Board to actively investigate issues in the market.

Currently the RTB has to receive a complaint about a landlord before a inspectors can investigate.

“I absolutely support rent transparency. And I believe that rent transparency does mean a rent register and I see no reason why we can’t do it like with the property price register,” Mr Murphy said.

“I have put it to the Attorney General that this is what we want to incorporate in our legislation in terms of making people understand what fair rent is meant to be and they can see quite clearly whether their rights are being breached.”

He launched housing charity Threshold’s annual report yesterday which showed the body received 75,526 calls last year, and a third were from tenants faced with losing their homes.

In the Dáil, Taoiseach Leo Varadkar came under attack for the Government’s performance on housing.

Sinn Féin leader Mary Lou McDonald said the Government had failed to help renters but given tax breaks to landlords. “It’s time for you to admit that your attempts to control rents have categorically failed,” she said.

The Taoiseach said it was wrong to “demonise” landlords. “We do actually need landlords in this country,” he said.

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Bamboozled by bills: 25pc of householders believe they were overcharged

Householders are being bamboozled by bills – with many fearing they are being overcharged, new research has found.

A quarter of consumers believe they were overcharged on at least one bill in the last year, research from price comparison site shows.

Most people feel they have no choice but to trust their supplier to get the bill right.

The research found that 62pc of consumers find household bills difficult to decipher, with electricity bills the hardest to understand. One in five gas customers also claims to have been overcharged for amounts in excess of €150.

A third of consumers don’t actually check their bills thoroughly – they are missing vital information, such as whether or not it was estimated.

Almost half of people rely on the suppliers to get their bills right, even though a quarter of people said they have been overcharged in the last year.

The survey comes as the regulator, the Commission for Regulation of Utilities (CRU), recently revealed 58pc of all complex electricity complaints were in relation to billing issues, while 69pc of all complex gas complaints were as a result of billing problems.

Managing director of Eoin Clarke said suppliers have a role to play in making bills as simple and accessible as possible, but consumers have a role to play too.

“Bills may seem boring, but they contain really important information. If you avoid reading them, you run the risk of being over or undercharged.

“You could also be missing out on opportunities to save money by changing your usage habits, or switching to a better deal,” he said, adding that most suppliers have a detailed breakdown on their websites, and dedicated customer service teams to take questions.

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Theresa May rejects accusation of hiding Brexit facts as full legal advice published

EU ‘ready for no-deal Brexit’ if UK sinks deal
Irish backstop for UK’s withdrawal deal could last ‘indefinitely’, legal advice states
Report also warns of Britain becoming stuck in “protracted and repeating rounds” of negotiations
Theresa May said she is listening to concerns on Brexit backstop to find way forward
DUP says UK government’s Brexit legal advice is devastating

Britain could be kept “indefinitely” in a customs union with the European Union if UK Prime Minister Theresa May’s Brexit deal is backed, according to details of the government’s full legal advice on the deal published on Wednesday.

The advice said that Britain risks becoming stuck in “protracted and repeating rounds” of negotiations to leave the European Union if it enters a so-called backstop arrangement.

“Despite statements in the Protocol that it is not intended to be permanent and the clear intention of the parties that it should be replaced by alternative, permanent arrangements, in international law the Protocol would endure indefinitely until a superseding agreement took its place,” the advice said.

The Protocol refers to the so-called Irish backstop agreement in May’s withdrawal deal she has agreed with the EU to prevent the return of border controls between Northern Ireland and Ireland.

The government was forced to publish its legal advice on its Brexit deal by parliament on Tuesday after being found in contempt for refusing to do so.

Many opposition parties members say they want to see the advice to better inform themselves before voting on Prime Minister Theresa May’s deal with the EU on December 11.

Following the report being published, Theresa May said she has not concealed the facts on the Brexit deal from parliament.

May was tackled by the leader of the Scottish National Party at Westminster, Ian Blackford, to explain why Northern Ireland would have a deal to remain in the EU’s single market under the so-called backstop and Scotland would not.

“We have not concealed the facts on the Brexit deal from members of this house,” she told parliament.

Read more: Explainer: What happened on day one of the Brexit debate – and what happens next?

The advice on how to exit the backstop agreement to prevent the return of a hard border between Northern Ireland and EU member Ireland is under scrutiny, particularly by May’s nominal allies in Democratic Unionist Party (DUP).

“I believe that the deal we have negotiated is a good deal. I recognise that concerns have been raised, particularly around the backstop and that is an issue, … I am continuing to listen to colleagues on that and considering the way forward,” Mrs May told parliament.

British interior minister Sajid Javid said the government was listening and continuing to explore ways to make the so-called backstop arrangement in the Brexit deal more acceptable to the DUP.

The DUP has shown its deep anger over the backstop arrangement to prevent the return of a hard border between the British province and EU member Ireland, arguing that it would essentially split the province from the rest of the mainland.

“I think again .. it’s right that we look and continue to explore whether there are other arrangements as well that can lead to more permanent and more easily acceptable outcome,” he told parliament.

Meanwhile, the European Union is continuing with contingency planning in order to manage Britain’s withdrawal from the bloc in the event the British parliament next week rejects a Brexit deal, a senior EU official said on Wednesday.

“We need to see what’s the outcome of discussion in UK parliament,” European Commission Vice President Valdis Dombrovskis told reporters. “We are preparing for the deal. We have agreed on the deal with the government. We are making sure that it can be implemented — and in parallel we have done some contingency planning also.”

The deputy leader of the DUP described the government’s full legal advice on Brexit as devastating.

The Democratic Unionist Party (DUP) are unhappy with the EU divorce deal’s so-called backstop provision which will align Northern Ireland more closely with the European Union than the rest of the United Kingdom if no other way can be found to avoid a hard border with the Republic of Ireland.

“Devastating,” Nigel Dodds said on Twitter after the advice was published. “The legal advice just published proves NI (Northern Ireland) would be in full EU Customs Union while GB (Great Britain) is not.”

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Digital tax kept alive by France and Germany

Europe’s efforts to tax large tech companies were kept on life-support yesterday as France and Germany proposed a final-hour compromise that scales back the broad plan initially envisioned by Paris.

Ireland, along with other countries including Sweden, opposes the tax plan and even the watered down proposals will face resistance.

The updated proposal is to tax the European advertising revenue of digital companies at 3pc. That’s watered down from an initial plan to set a levy on all digital revenues of large multinationals.

The new plan would generate about half the revenue previously planned and mainly hit Google and Facebook, which dominate the online ad market, according to an official with knowledge of the matter.

Both companies are among Ireland’s biggest employers and pay significant corporation taxes here, though the bills are a tiny fraction of the massive revenues booked here.

“Like any European compromise, some will be disappointed. They’ll say it’s not enough and I can understand them,” France’s finance minister Bruno Le Maire said.

The tax plan requires unanimous support to come into force as EU-wide legislation.

The Irish position is that any major changes to international taxation should be agreed through the Organisation for Economic Cooperation and Development (OECD) level – where the US and other big non-EU countries are also represented.

Finance Minister Paschal Donohoe is understood to have reiterated that position at yesterday’s meeting in Brussels.

“The Minister continues to have strong principled concerns about this policy direction as previously outlined. As other countries mentioned, the right and safest way to deal with this is through the OECD to find consensus on global matters. Ireland will engage constructively over the coming weeks and months,” a spokesman said.

Finance ministers from reluctant countries didn’t give their backing to the narrowed Franco-German plan at the meeting, but said they wouldn’t stand in the way of further talks. “I promise to be constructive and I’m ready to look at the proposal, but I still have serious concerns with it,” said Finnish Finance Minister Petteri Orpo.

A draft of the new proposal will be presented by the European Commission within weeks and put to a vote of member states in 2019.

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Mortgage approvals jump by 11pc as values also increase

Mortgage approvals jumped in October, both in terms of volume and value.

Across all types of borrowers, banks approved a total of 4,262 mortgages in October, up 11.4pc month-on-month.

This is a 13.6pc increase in approvals year-on-year, figures from the Banking and Payments Federation Ireland show.

First-time buyers accounted for the lion’s share of activity, with 2,014 mortgage approvals.

The figures also show the value of mortgage approvals rose by 11.4pc year-on-year, and 13pc when compared with the previous month.

Mortgages approved in October 2018 were valued at €929m, of which first-time buyers accounted for €446m.

Meanwhile, the level of re-mortgaging or switching approvals rose on a year-on-year basis by 71pc both in volume and value terms – albeit off a low base.

Commenting on the figures, Felix O’Regan, director of public affairs at the Banking and Payments Federation, said: “All segments of the mortgage market contributed to an overall increase in annualised approval volumes and values in the 12 months to end-October 2018.”

Last month, following a review, the Central Bank said the rules dictating the amount of money people can borrow for a home and the size of deposits needed are to remain unchanged.

Introduced in 2015, the rules are in place to stop banks over-lending and consumers from over-borrowing.

The rules have been credited with slowing down the pace of house price growth.

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Drive down wage costs, renegotiate supplier prices to boost profits

Q. Could you give me a few words of wisdom on improving the profitability of a manufacturing business?

A. Sales are vanity, profit is sanity. It is good to see that you are focused on the bottom line. In most manufacturing businesses wages tends to be the biggest cost.

It is not so much about slashing your payroll cost, but about being more efficient and able to produce more product with the same labour levels.

Enterprise Ireland has great supports for lean manufacturing, and if you have not embraced these already I would suggest you investigate the topic and if possible get a lean expert into your business.

Many manufacturers that I have met have missed the opportunity when encountering good business growth to renegotiate prices with their suppliers.

I am sure your business is two or three times bigger since you started. Have you renegotiated prices of items you are buying in?

Very few of your suppliers are going to volunteer discounts and therefore tendering your key costs would be a vital part of improving profitability.

Surprisingly, growing your sales can very often be a solution to increasing profitability. Some businesses make the error of slashing all costs, which in turn makes it difficult for the business to grow. It is about creating a balance.

If you can maintain the business costs at current levels, and drive more sales through at the same time, that will automatically result in the business being more profitable.
Do keep that in the mix of actions you take, otherwise you run the risk of stifling business growth.

Q. I produce a product in the health and beauty sector. I have a relationship with a number of retailers. One of these retailers has an imported product similar to mine on the shelf, which I think is unfair. The product is cheaper and is damaging my sales. How can I get them to remove it?

A. I have bad news for you – retailers will do what they want and how they want to do it.

For you to be complaining that a competitor product is cheaper isn’t credible – and not a conversation I would be encouraging you to repeat, especially to a trade buyer.

I can fully understand the frustration of you working so hard to develop this product, only to find an imported product in the same space.

The reality is that that is life.

Forget about the competitor product and put all the energy into your own product. Build your brand. Go out and meet customers at the coalface and explain to them why it is different. Have a strong digital media strategy. Enter your products in all the awards you can. Secure as much free media coverage.

In general, be seen as someone who is ‘top of your game’ by trade buyers. They really respect this, especially if you have a deep understanding of their business and you are able to articulate opportunities for your product within their shops.

That is what will get you extensive growth and the ear of a buyer.

The big advantage you have is that you are ‘on the ground in Ireland’ and will always have a distinct advantage over the competitor product.

You can achieve so much more by way of brand recognition, etc, and this is where your energy needs to focus.

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