Simon Harris is ploughing ahead with his new investment plan which will be announced in his Budget 2027 speech in October. While details are limited at the moment, it is said to favour the Swedish Investeringssparkonto (ISK). I have already written about sorting out the existing structures first (where is this implementation roadmap which was promised early this year? 🤔).
Under the Swedish system, the first 300,000 SEK (about €27,600) is tax free. Over that amount, a tax is paid on the remainder each year. It doesn’t matter if you are making a loss or a gain, the tax is deducted. And the tax is on the full amount over the threshold, not just the gain. The tax is deducted by the provider and paid to the Revenue, so you do not have to include it in your tax returns.
The tax isn’t just a flat rate. The rate is arrived at by taking 30% of the the government borrowing rate plus 1%. At present the borrowing rate is 2.55%, so add 1% and divide by 30% and the tax is 1.065%.
I carrying out this comparison, I am going against my instincts and I am going to be an optimistic. The comparison is based on the following assumptions:
We can see from both the 10 and 20 year projection that the gross value of the existing value is higher, showing the power of compounding when an asset is just left alone undisturbed. But as they say, there is only two things certain in life, death and taxes, so at some stage tax will have to be paid. Having a very low tax on both capital and gain is a lot better than having a high tax (33% is still high) on just the gains.
*If you are wondering why maths isn’t adding up on the tax on the ISK example, remember that the tax is deducted on an annual basis once the fund is over €30,000. The amount shown is the total paid over that period.
Based on the numbers, the ISK model looks a lot better than what we have. Now it is up to the government not to make it overly complicated.
Steven Barrett
13 April 2026