Change to PRSAs proposed in Finance Bill

The Finance Bill proposes a change in the tax treatment of certain PRSAs for policyholders over the age of 75.

A change to the treatment of certain PRSAs has been included in the recently published Finance Bill.

Currently vested PRSAs (i.e. PRSAs from which assets have been made available to the PRSA owner or some other person) are subject to an imputed distribution regime, similar to Approved Retirement Funds. This means that a certain percentage of the value of the policy is taxed each year as if it has been drawn down. However, non-vested PRSA avoid the imputed distribution regime.

The proposed change means that once a PRSA owner reaches the age of 75 the PRSA will have deemed to have “vested” and become subject to the imputed distribution regime. This change was not flagged in the budget day speeches.

Corporate Business will work to implement this change on the basis that it is part of the Finance Act.