Capital Gains Tax (CGT) reliefs

Revised Entrepreneur Relief

Note

This relief replaced the Entrepreneur Relief that applied for the years 2014 and 2015.

This relief gives a CGT rate of 10% on gains from the disposal of chargeable business assets. This is reduced from the standard rate of 33%. The rate is 20% for disposals from 1 January to 31 December 2016.

Lifetime limit on gains

You can claim the relief on the first €1,000,000 of gains arising between 1 January 2016 and 31 December 2025. For gains arising on or after 1 January 2026, the lifetime limit increases to €1,500,000. You must add together all prior gains on qualifying disposals to check if you have reached your lifetime limit. Only gains on disposals made on or after 1 January 2016 count towards the limit.

Disposals that do not qualify

The relief does not apply to disposals of:

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

In the last two cases, the relief may apply where the disposal is made for genuine commercial reasons and not for tax avoidance.

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. In the case of shares, you must have owned at least 5% of the ordinary shares for a continuous period of three years. The three year period can be at any time prior to the disposal.

Qualifying business assets

Qualifying business assets are:

shares held by an individual in a trading company or a holding company of a qualifying group
assets owned by a sole trader and used in their trade.

Qualifying business

A qualifying business is a business other than the:

holding of securities or other assets as investments
holding of development land
development or letting of land.

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:

the company
or
a holding company of a qualifying group.

This means that the relief would not apply where:

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

A ‘holding company’ is a company whose business consists wholly, or mainly, of the holding of shares. It must hold shares in other companies, all of which are its 51% subsidiaries.

A ‘qualifying group’ is where the business of each 51% subsidiary consists wholly, or mainly, of the operation of a qualifying business. (This does not include the holding company.)

Qualifying company operated by an individual

You must have been a director or employee of the company (or companies) in a qualifying group. You must have:

spent no less than 50% of your time in the service of the company (or companies) in a managerial or technical capacity
and
served in that capacity for a continuous period of three years. The three years must be in the five years immediately prior to the disposal of the business assets.

You can find full details in the Revised Entrepreneur Relief manual.