COMMENT: Turning savings into tax-free capital

By David I Rumsey, 3D Global

 

Few people are aware that, in Cyprus, there are excellent tax breaks on certain types of savings plans: by taking out the right type of plan, you could reduce your income tax AND take a tax-free lump sum or income after six years. The fact that few people are aware of these tax benefits means that most tax payers are paying more than they need to.

In order for a plan to qualify for tax deduction and for the proceeds to be tax-free, it must satisfy the following criteria: firstly, it is approved by the Cyprus Insurance Companies Control Service; secondly, it has a minimum amount of life cover (15 times annual savings); thirdly, it runs for at least 6 years. The tax-deduction starts from day one and employees simply present the plan schedule to their employer who will amend PAYE accordingly.

There is a limit to how much any one person can claim in tax deductions and the limit is set at 16.3% of salary.

For example, a client of 3D is earning £30,000 per year and currently has no deductions for income tax. She pays £5,250 in tax. She takes out a qualifying plan for £400 per month. Her tax bill comes down to £3,810, a saving of £1,440. After 6 years of payments, all of the proceeds of the plan can be taken tax-free either as a lump sum or an income or a mixture of both.

This concept is not new in Cyprus and all of the large insurance companies provide such plans. Now that the Cyprus market is opening open, however, foreign companies are also looking to market their products here. One such company is Friends Provident International. The FP Group, a FTSE 100 company, is 175 years old, managers 157bn Euros and has 2.5 millions customers worldwide. It has just launched UltimaSave in Cyprus. This is a qualifying plan for tax purposes. With UltimaSave, investors can access some of the world’s best fund management groups such as Fidelity, JP Morgan, New Star, Merrill Lynch and Franklin Templeton: 10 funds can be held at any one time from a range of 68 funds altogether. Switching between funds is free of charge.

The UltimaSave is available through 3D Global, the Cyprus-based financial services group, for as little as 100 Euros per month. 3D also provide daily online reports free of charge to their customers.

 

For more information on the UltimaSave contact 3D Global on [email protected] or 25 82 82 92.

 

3D is approved and regulated by the Insurance Company Control Service (ref 1941 and FOS4).