Tax Tip: 10% CGT

If you are disposing of either shares in a trading company or the assets of an unincorporated business look to avail of Entrepreneur Relief. By using it the first €1m of any gain from the disposal of these assets will bear CGT at 10% rate rather than at the standard rate of 33%.

Entrepreneur Relief provides that a 10% rate of CGT applies to the chargeable gains of individuals on disposals of qualifying business assets up to a lifetime limit of €1m. A qualifying business is a business other than the holding of securities or other assets as investments, the holding of development land or the development or letting of land.

These assets must have been owned by that individual for a continuous period of 3 years in the 5 years immediately prior to the disposal. Periods of ownership by spouses cannot be aggregated for the purpose of the 3-year continuous ownership condition nor can periods of ownership of assets before and after incorporation of a business.

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.

As well as gains on the sale of qualifying assets the relief also applies to gains from share buy-backs and gains on the liquidation of companies.

To find out more about Entrepreneur Relief, please arrange a consultation with one of our advisors.

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Stephanie Kirby, tax director
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