Retirement Relief may apply to business owners who either sell or gift their business where a gain has arisen on its disposal. This relief allows an exemption from Capital Gains Tax (CGT) at 33%.
Contrary to its title “Retirement Relief”, you do not actually have to be retiring to avail of this relief. Below is a very high level detail of some of the conditions:
- Owner must have reached their 55th birthday at the time of disposal
- Assets disposed of must be qualifying assets i.e.,
- Must give rise to CGT if sold
- Can be Goodwill, land, buildings or machinery
- Owner must have owned the relevant assets for at least 10 years
Relief from CGT is capped at certain amounts depending on the age of the business owner and the relationship to the recipient as follows:
- Aged 55 to 66 and disposing to a qualifying child – No Limit
- Aged over 66 and disposing to a qualifying child – capped at €3 million
- Aged 55 to 66 and disposing to someone other than a child – capped at €750,000
- Aged over 66 and disposing to someone other than a child – capped at €500,000
These amounts are not tax free thresholds, retirement relief does not apply where these amounts are exceeded and could be subject to CGT on the entire consideration. Marginal Relief however may apply where the sale marginally exceeds these amounts. Also, a clawback may occur where a child disposes of the assets within 6 years.
Retirement Relief can be very valuable and provide an exemption from CGT for many business owners. The above conditions are not exhaustive and we strongly recommend professional advice if you are considering utilising Retirement Relief
The above article is for general use only and does not constitute advice. It is accurate based on date of publication and further clarification on possibly rule changes should be sought.
If we can we be of further assistance, please do not hesitate to contact us.