An individual only may claim relief from CGT in respect of a chargeable gain arising on the disposal of qualifying business assets.
There is a lifetime limit of €1 million on the gains made on or after 1 January 2016 that you can claim relief on. If you can claim this relief, you will pay CGT at the rate of 10% on gains from the disposal of business assets. This is reduced from the normal rate of 33%. Up to 31 December 2016, gains from such disposals are charged at 20%.
The qualifying business assets must have been owned by that individual for a continuous period of 3 years in the 5 years immediately prior to the disposal of the assets.
Where a business is carried on by a company, individuals seeking to qualify for the relief must own not less than 5% of the ordinary shares in the qualifying company or 5% of the ordinary shares in a holding company of a qualifying group.
The individual must have been a director or employee of the qualifying company (or companies in a qualifying group) who is or was required to spend not less than 50% of his or her time in the service of the company or companies in a managerial or technical capacity and has served in that capacity for a continuous period of 3 years in the 5 years immediately prior to the disposal of the chargeable business assets.
The relief does not apply to the following assets:
- shares, securities or other assets held as investments
- development land
- assets on the disposal of which no chargeable gain would arise
- assets personally owned outside a company, even where such assets are used by the company
- goodwill which is disposed of to a connected company
- shares or securities in a company where the individual remains connected with the company following the disposal
Subject to the conditions of the relief being met, the relief can be granted in the following scenarios:
- Share buybacks
- Company liquidations
- Double holding company structures
- Partnership assets
If you require further information please call Una Beecher on 021 431 0266.