Dominic Coyleanswers your questions
Ban on UK bonds
When I lived in England, we bought UK premium bonds and enjoyed some success. When we subsequently moved to Europe, we continued to invest in them. However, when we returned home here, we were told we could not buy UK bonds from Ireland. Why not?
Ms H C, e-mail
The Government seems to take a rather rigid view of UK premium bonds. This is rather strange as our own prize bonds currently the subject of a high-profile marketing campaign - operate on the same basis.
Essentially, you invest in the bond and are entered for regular draws. Your bond or bonds enter each draw, regardless of whether that bond has already won a tax-free prize. If, at any stage, you decide you no longer wish to continue the investment, you can redeem the bond for its face value.
The Government's position is that, under Section 34 (1) of the Gaming and Lotteries Act, 1956, Irish residents may not take part in lotteries outside of Ireland. At issue, really, is whether this is a lottery within the meaning of the Act- and even if it is, is this legislation contrary to EU law?
You will be glad to hear that the European Commission is investigating this area and has triggered an "infringement procedure" against the Government and written to it, officially requesting information on the basis for the bar on acquiring UK premium bonds.
The Government has sought more time to present its views - and this will now happen early in the new year.
The commission says it disputes the classification of the UK bonds as lotteries, as both premium bonds and Irish prize bonds are marketed and sold as risk-free, state guaranteed investments.
It is concerned that the Irish bar is not compatible with the right to free movement of capital and the free movement of services enshrined in EU treaties.
If it is not satisfied with the Government response, Ireland could again find itself in the European Court of Justice.
Taxing share issue
You stated on November 30th last that high-yield shares are taxed at 41 per cent. Surely not when you are on the lower rate? My dividend on Vodafone is taxed at source and the reduction appears less than 20 per cent.
Mr B Q,Wexford
The query to which you refer came from a higher rate taxpayer who asked specifically what safe investments he might consider that would give a positive net return after inflation. You are correct when you say that I referred to high-yield shares but my answer was framed by his circumstances. To quote from the reply: "Of course, dividends are charged as income, so you would face a 41 per cent charge on any such income. . ." and indeed he would.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by e-mail to dcoyle@irish-times.ie .
This column is a reader service and is not intended to to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.
