As of 1st January 2025, significant changes will be introduced in relation to Retirement Relief and the restrictions that currently apply.
Retirement Relief provides relief from Capital Gains Tax (CGT) on the disposal of certain business assets and shares in certain companies. The relief is of particular importance to succession planning within family businesses.
Although referred as “Retirement Relief”, it is not a stipulation that the individual claiming relief actually retire from employment or involvement in the business.
Retirement Relief may apply in two scenarios:
Disposals to Children:
At present, if the individual disposing of the qualifying assets is aged between 55 and 65 years of age and the disposal is to a child, unlimited relief may be claimed irrespective of the value of the assets. The relief is restricted to €3 million if the individual is aged 66 years or over. The changes will now restrict relief available for individuals between 55 and 69 to €10 million. The relief threshold is restricted to €3 million for those aged 70 years or over.
Disposals to Persons other than Children:
Under the current rules, there is full relief on disposals of qualifying assets up to a value of €750,000 where the disposal is made between the ages of 55 and 65. The threshold is reduced to €500,000 where the individual is aged 66 years or over. The new rules will extend the €750,000 relief up to the age of 69. Correspondingly, the €500,000 cap will be from age 70 and onwards.
Disposals to Children
| Age of person disposing to child |
Period to 31 December 2024 |
1 January 2025 onwards |
| Age 55 to 65 |
No limit on qualifying proceeds |
Limit of €10,000,000 |
| Age 66 to 69 |
Limit of €3,000,000 |
Limit of €10,000,000 |
| Age 70+ |
Limit of €3,000,000 |
Limit of €3,000,000 |
Disposals to Persons other than Children
| Age of person disposing to person other than a child |
Period to 31 December 2024 |
1 January 2025 onwards |
| Age 55 to 65 |
Limit of €750,000 |
Limit of €750,000 |
| Age 66 to 69 |
Limit of €500,000 |
Limit of €750,000 |
| Age 70+ |
Limit of €500,000 |
Limit of €500,000 |
Impact of these changes for family businesses
In practice, this means that individuals who are aged 65 or under with a business valued at more than €10m, have a limited window to consider the transfer of the business to their children i.e. before 31 December 2024.
In addition, business owners aged between 66 and 69 who were subject to a €3m limit, may now benefit from an increased limit of €10m on the transfer to their children. This category of business owner should consider planning for transfer in 2025 when the new thresholds are applicable.
Business owners considering a disposal to persons other than children should also be mindful of the new limits which essentially preserves the €750,000 threshold until the person has attained 70 years of age.
How can we help?
We can advise you and your family on CGT/CAT filing requirements and obligations, as well as advising on structuring transactions exposed to CGT/CAT, transfer of assets and detailed estate planning.
CONTACT US
Colin Dignam | Tax Director | Dublin
colin.dignam@mooreireland.ie
+353 1 888 1004
Eoghan Bracken | Tax Partner | Dublin
eoghan.bracken@mooreireland.ie
+353 1 888 1004
Padraig O’Donoghue | Tax Partner | Cork
padraig.odonoghue@mooreireland.ie
+353 21 427 5176