Arranging to sell tax-exempt assets is always an attractive idea. If you are at least 55 years of age or are approaching this age you should bear in mind that significant relief from Capital Gains Tax is available for gains on disposal outside the family of certain types of business assets. What is more, you don’t even have to retire in order to qualify.
Retirement Relief is a useful method of minimising CGT however it’s something of a misnomer. To qualify for this Relief you don’t have to retire, you merely have to dispose of what are known as qualifying assets on or after the date you reach the age of 55.
The relief is calculated by reference to the level of the consideration that you obtain from the disposal of qualifying assets outside the family. The separate amounts of consideration for all such disposals over the lifetime of the individual are aggregated and relief is available up to a threshold of €750,000 for individuals aged under 66 years and €500,000 for those over 66 years.
Qualifying assets include assets, including goodwill, used for the purposes of a trade or profession or for farming which the individual claiming the relief has owned for a period of at least 10 years together with shares in a trading company, a farming company or the individual’s family company that the individual has owned for at least 10 years.
Throughout this time the company concerned must have been carrying on a trade or have been farming and the individual must have been a working director for a period of at least 10 years during which he had been a full-time director for at least 5 years. Where the qualifying assets are shares, the individual must hold at least 25% of the voting rights of the company or at least 10% in a case where the company is 75% owned by his or her family.
Agricultural land will also constitute a qualifying asset provided that it meets certain conditions.
To find out more about Retirement Relief, please arrange a consultation with one of our advisors.