The bones of Retirement Relief and Entrepreneurial Relief

[Brendan Burgess]

I am trying to clarify how these two reliefs work in the majority of cases i.e. a person who owns and runs a business for a number of years. (I don't want to deal with the exceptions and obstacles in this post.)

First does he qualify for Retirement Relief?

If he is aged between 55 and 65 and the sales proceeds are under €750k, he pays no CGT.
If he is 66 or over, and the sales proceeds are under €500k, he pays no CGT.

If they are a bit above those limits, there is Marginal Relief.

Example of Retirement Relief
Aged 60
Set up a company with no costs.
Liquidates the company and distributes €600k of assets.

Qualifies for Retirement Relief so is exempt from CGT.


If he is 54 or under ...
He won't qualify for Retirement Relief but will get Entrepreneurial Relief.

He will pay 10% on the first €750k of gains.

Example or Entrepreneurial Relief:
Age 50
Capital gain €1,050,000
€750k @10% = €75k
€300k@33% : €99k
Total tax: €174k.

If he is aged 70 and sells a business with a Capital Gain of €1,750k

Retirement Relief won't be any use to him.
he will qualify for Entrepreneurial Relief

€750k @10%
€1m @33%

 

[sunnyside]

Is it not the first 900k at 10% for entrepreneurial relief ?

 

[Brendan Burgess]

Don't know where I got the €750k figure

I think it's actually €1m

Revised Entrepreneur Relief

A description as to what the Revised Entrepreneur Relief is

www.revenue.ie

This relief gives a CGT rate of 10% on gains from the disposal of qualifying business assets. This is reduced from the normal rate of 33%.

There is a lifetime limit of €1 million on the gains that you can claim relief on.

Entrepreneur relief

Relief from Capital Gains Tax (CGT) is available for individual entrepreneurs disposing of certain business assets. Entrepreneur relief was originally introduced under Finance (No 2) Act 2013 however has since been revised by Finance Act 2015 with the aim of encouraging serial entrepreneurs to...

www.grantthornton.ie

Brendan

 

[Brendan Burgess]

I see that I have written about it here before

Key Post - How does Entrepreneur Relief work for contractors?

I've carried out quite a bit of research into entrepreneur relief and I think it's a viable medium term option. My understanding is I'd incur: (a) 12.5% corporation tax when retaining profits in the company (b) Professional services surcharge of 15% on 50% of my undistributed income (as I have a...

www.askaboutmoney.com

 

[Bill90.]

Don't know where I got the €750k figure

I think it's actually €1m

Revised Entrepreneur Relief

A description as to what the Revised Entrepreneur Relief is

www.revenue.ie

This relief gives a CGT rate of 10% on gains from the disposal of qualifying business assets. This is reduced from the normal rate of 33%.

There is a lifetime limit of €1 million on the gains that you can claim relief on.

Entrepreneur relief

Relief from Capital Gains Tax (CGT) is available for individual entrepreneurs disposing of certain business assets. Entrepreneur relief was originally introduced under Finance (No 2) Act 2013 however has since been revised by Finance Act 2015 with the aim of encouraging serial entrepreneurs to...

www.grantthornton.ie

Brendan

Would a business asset include liquidating a corporate investment account?. Say a business invested 200k in an index fund over 10 years and closed thw account valued at 400k. Would entrepreneurial relief be available to a director here?