Earlier this year, Stocktake suggested Minister for Finance Simon Harris might be tempted to borrow Sweden’s model for encouraging people to invest.
It turns out he was. The Savings and Investment Account (SIA) announced in Budget 2027 is not a carbon copy of Sweden’s ISK, but the resemblance is clear.
Investors can put up to €12,000 a year into the account, with the first €50,000 of investments exempt from tax, while amounts above that will face an annual 1 per cent charge.
Some will be irked by that charge, especially in years where stock markets have fallen. However, a UK-style tax-free wrapper, allowing savers to invest up to £20,000 a year completely free of tax, always appeared excessively generous and politically indefensible.
For the Government, a Swedish-type approach offers a predictable tax stream while encouraging people to put their savings into shares and funds (and a €50,000 tax-free limit is more generous than many expected) rather than leaving them in cash.
However, the new account also highlights the problem with the system outside it. Investments held in the SIA will escape deemed disposal, while investors buying ordinary ETFs will continue to face an eight-year tax charge on unrealised gains, albeit at the reduced rate of 35 per cent.
The Government says it intends to move beyond deemed disposal during the lifetime of this administration, but substantive reform has again been deferred.
And there is a second, less discussed problem. The Funds Sector 2030 review recommended limited loss relief, but the Government’s roadmap says it will not be introduced. As Stocktake previously noted, an investor who makes €5,000 on one ETF and loses €5,000 on another can therefore have no overall gain but still face tax on the €5,000 profit.
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That is less of an issue for someone holding one broad global ETF, but it matters for a portfolio of separate funds.
Some will have issues with the SIA, but it’s arguably a welcome attempt to make investing simpler. The harder task is making the wider investing tax system equally sensible.