Insurer to inform shareholders on how to avoid tax bills on payment

British insurer Standard Life will write to more than 5,000 Irish shareholders to advise them on how to avoid tax bills on a payment made by the company earlier this year.

A large group of the company’s Irish shareholders were left with significant tax bills last year following a payment from the company that went wrong.

A problem with the postal systems in Ireland or Britain meant 5,300 Irish shareholders were left facing a tax bill that would consume half of a 73 pence sterling (almost €1) per share payout made by the company last March.

The payout followed the sale of Standard Life’s Canadian business for £2.2 billion in 2013. At the same time, the company implemented a consolidation of its shares so that investors received nine new shares for every 11 previously held.

Shareholders could choose to receive the payment as capital – which made sense for most Irish shareholders – or via the default option of income, leaving taxpayers open to bills equivalent to 52 per cent of their payment.

In limbo

About 5,300 Irish shareholders were left in limbo after forms expressing their preference for a capital payout were lost in the mail.

The forms eventually turned up but only weeks after the deadline.

In the Finance Bill published last week, Minister for Finance Michael Noonan said anyone who could show Revenue that they had applied for the payment as a capital sum ahead of the deadline would have their payment treated as such by the Revenue, regardless of how Standard Life paid the money.

Previously, the Minister had said he saw no reason to make provision for Standard Life shareholders.

In a statement over the weekend, Standard Life said it would be writing to all shareholders affected by the changes outlined in the Bill.

“We understand that the Revenue Commissioners will accept this letter in any submission required by our shareholders qualifying under the criteria in the legislation to prove that their form was completed and signed before the deadline,” the company said.