Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended 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.
Vodafone
In relation to your answer to the Vodafone sterling dividends query two weeks ago, where you say one way out of the problem is to opt for a scrip dividend, how is it done?
Mr M.D., Kildare
Where a company offers the option of taking a scrip dividend - a dividend taken in the form of extra shares in the company rather than in cash - it is simply a case of notifying the company that this is how you wish to receive your dividend payment.
This is done through the company registrars, who are responsible for the company's share register and for ensuring that shareholders receive their dividend as well as handling changes to the register when people buy or sell shares.
In the case of Vodafone, the registrar is Computershare Services. The office dealing with Vodafone - which is registered as a company in Britain - is PO Box 82, The Pavilions, Bridgewater Road, Bristol BS99 7HN, England. You can either write to that address looking for a form to apply for receipt of your dividend by way of scrip (shares) or ring 0044 870 7020000. I know Computershare have offices in Dublin but I am told that you need to apply to the British office in the case of Vodafone.
SSIAs
There was a Q&A last week, which claimed a man and wife were each putting £400 per month into a SSIA. Is not the monthly individual limit £200?
Mr P.L., Dublin
The position put last week was not that a man and wife were each putting £400 into a special saving incentive account but that each was putting in the £200 maximum monthly payment permitted. Both payments were coming from the husband's account - a situation permitted between spouses - which meant he was paying £400 per month. With the change of monthly payment date suggested by his bank to ensure he avoided missing any payment in months when weekends and bank holidays conspired to push his late month payment into the start of the following month, he would effectively be paying £800 from the one salary in a given month. This would be £200 for him and his wife at the end of one month (he currently lodges to his SSIA on the 26th or later) and £200 each at the beginning of the second month - all above board.
Can one vary the amount of savings from month to month? For instance, can I put in £100 this month and £150 next month? Can I make more than one lodgment per month up to the maximum of £200?
Mr S.R., Dublin
Yes, you can. At the outset, the Revenue was insisting that the same amount be saved each month for the first year of each person's special savings incentive account. However, the initial guidelines were very unclear and many institutions had marketed their products on the basis of total flexibility. They argued that the original wording allowed such flexibility and, in the end, the Revenue conceded that people could vary the amount they lodge to the accounts on a monthly basis. The only condition to that is that, for the first year, a minimum £10 contribution must be made every month. Beyond the first 12 months, even that is waived.
I have checked with a number of the banks about multiple monthly contributions and I gather these are fine. That makes sense because the aim of the scheme is to encourage saving.
You will need to check any conditions applying to the particular product on offer by the institutions. Some may well be reluctant to allow multiple contributions in any given month in order to reduce their administrations costs. The same applies to varying amounts saved from month to month. Certain products change the interest rate/charge depending on the amount saved.
I am an Indian, working in Ireland for the past one year. I will be staying in Ireland for the next two years but I am not sure of my plans after that. Can I invest in the special savings incentive scheme and continue it for the last two years and not incur any penalty?
Mr R.R., e-mail
You might be able to. If you are tax resident here, there is nothing to stop you opening such an account. Provided you are tax resident for three years, you will become ordinarily resident, a status that could continue for up to three years after you leave the Republic. In those circumstances, you would continue to be eligible to partake of the scheme.
If your circumstances do not match those outlined above at any stage - for instance, should you become tax resident elsewhere - you would no longer become eligible. Worse still, you would not even be allowed to keep your savings intact and untouched until the five years runs its course; you would be forced to close the account and would be taxed at the base rate, plus 3 per cent (currently 23 per cent).
This tax charge would be levied not only on the Government bonus and on any investment gain or interest, but also on the money you contributed to the account - money on which you have already paid tax. As such, I would suggest you get a specific ruling from the Revenue or the institutions with which you intend to open such an account before proceeding.
