Capital Gains Tax – Retirement Relief

The Finance Act 2012 made changes to the retirement relief available under Capital Gains Tax (CGT), which came into effect on the 1st January 2014.

Up until 1st January 2014, persons aged 55 years or more who disposed of their business assets either to a child or third party (where consideration did not exceed €750,000) and the conditions were fully met, were granted relief from CGT on the disposal/transfer. The individual did not actually have to retire for the relief to be available.

The changes to the relief apply to those who are 66 years or older at the time of the claim and who are transferring to a child or favourite niece/nephew. There is now a restriction on the relief  where the market value of the assets is more than €3m. In this instance relief will only be given as if the consideration was €3m, therefore CGT would be chargeable on the excess.

For transfers to a third party by those aged 66 or over the consideration limit has been reduced to €500,000 from €750,000.

These limits are lifetime limits therefore it would be crucial for many business owners to look at their future situation before they reach 55 years of age or 66 years of age in order to put into place a plan to maximise the relief and lifetime limits available.

For further information on capital gains tax and retirement relief available and the full conditions to be met please contact Charles or charles@charlespcrowley.com or on 023 – 8841899.