Capital Gains Taxes

We look at how capital gains are taxed and what reliefs are available. If you live in the Ireland region, At TAS Limited, we can give taxes assistance to ensure that you get the most out of the capital gains taxes reliefs available.

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What are the most important characteristics of the existing system?

When net total taxable gains and income are less than the income tax basic rate band threshold, capital gains tax (CGT) is imposed at a rate of 10% on gains (including any held over gains coming into charge). Gains or parts of gains beyond the basic rate band are taxed at 20%, with a few exceptions discussed in the section below titled “Exceptions to the CGT rates.”

On certain business disposals, business asset disposal relief previously known as Entrepreneurs’ Relief or Investors’ Relief (IR) may be offered.

(BADR) Business asset disposal relief

For some business disposals, BADR may be available, resulting in an effective 10 percent charge of the first £1 million of relief gains.

The relief is at the disposal of persons:

The entire or part of a commercial enterprise carried on by a person, alone or in partnership
Shares in the ‘personnel firm’ of an individual
Assets used within the last three years by a firm or a company

When a person makes a qualifying business accessible, a related disposal’ may also be offered. A disposal of an asset is a related disposal:

Used in an individual’s qualifying company or group of enterprises or used in a partnership where the person is a partner.

The 5% rule applies to corporation stockholders

The company must be an individual’s “personal company” to qualify for BADR, and the individual must:

Minimum of 5% of the company’s ordinary share capital

Be a company employee or a holder of an office

At least 5% of the voting rights must be able to be exercised.

Also one of the following tests must be met for disposals on or after 29 October 2018:

a distribution test – a person has the right to at least 5% of the company’s profit for the distribution to shareholders and 5% of the assets for the delivery to equity holders in the winding-up process. A test for proceeds – in the event of disposal of the entire share capital of the company, an individual is entitled to at least 5% of its proceeds.

Investors’ Relief

In unlisted trading firms, IR is addressed at external investors (other than specific employees or officials of the company). The following requirements must be satisfied to qualify for the 10% CGT rate under “investors’ relief”:

Individual shares must be newly issued and subscribed for for new consideration.
be a part of an unlisted trading firm or a trading group’s unlisted holding company
have been issued by the business on or after March 17, 2016 and held for three years as of April 6, 2016.
having been kept for a total of three years before being disposed of.

Annual CGT exemption

Individuals are able to make profits up to the annual exemption each tax year without having to pay CGT. For 2021/22, the yearly exemption is £12,300 (£12,300 in 2020/21). It’s worth thinking about making sure both spouses/civil partners use this service.

The rates of CGT are typically between 10% and 20%. Carriage interest and chargeable profits on residential property that does not qualify for private home relief, however, are taxed at 18% and 28%, respectively.

Additional reliefs to which you may be eligible

Relief for private residences
Any unused allowable losses from previous years that can be carried forward to offset any gains
Business asset rollover relief, which allows a gain on a business asset to be postponed until a later date
Business asset gift relief, which allows the gain on given-away business assets to be deferred until the donee disposes of the assets

How can we assist

In order to minimise capital gains tax, careful planning of disposals of capital assets is essential. We in TAS Consulting Limited would like to talk to you about the alternatives if you live in Ireland. If you would like additional advice, please contact us.

Call us at +353 1 442 8230 or moh@tasconsulting.ie by email.