Entrepreneur relief

Entrepreneur Relief

This relief gives a CGT rate of 10% on gains from the sale 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. Only gains on disposals made on or after 1 January 2016 are counted in the limit.

The relief does not apply to disposals of:

1. shares (other than shares that qualify for relief under this section), securities or other assets held as investments
2. development land
3. assets on the disposal of which no chargeable gain would arise
4. assets personally owned outside a company, even where such assets are used by the company
5. goodwill which is disposed of to a connected company
6. shares or securities in a company where the individual remains connected with the company following the disposal.

How do you qualify for the relief?

You must have owned the business assets for a continuous period of three years. The three years must be in the five years immediately prior to the disposal. The business asset must be used for a qualifying business.

Qualifying business assets

Qualifying business assets are:

1. shares held by an individual in a trading company
2. owned by a sole trader and used in their trade.

Qualifying business operated by a company

Where a business is operated by a company you must have owned at least 5% of the ordinary shares in either:

1. the company
2. a holding company of a qualifying group.

This means that the relief would not apply where:

1. there is a dormant company in a group
2. one of the subsidiaries is not a trading company.

Subject to qualifying conditions and criteria

Any queries on the above give me a call on 091 763817 or email me at oliver@taxreturnhelp.ie