From 1 January 2016, the rate of CGT applying to a disposal by an individual of the whole or part of a qualifying business (which can include shares – minimum 5% ownership) was reduced to 20% from 33%. This rate will be further reduced to 10% following the announcement made by the Minister for Finance on Budget Day.
There is a lifetime limit €1m, again which could increase in future Finance Acts, which happened in the UK where the lifetime limit for their 10% CGT rate has increased from £1m to £10m in recent years.
Individual shareholders may qualify on the disposal of shares which they have owned for at least 3 years provided they meet certain other conditions, the main ones being the activities of the company / group and the requirement to work 50% of one’s time in a managerial or technical capacity.
This rate can be available for share buybacks and also company liquidations. In view of this change and also the possibility of availing of CGT Retirement Relief in certain circumstances (€750k tax-free), it is worth considering whether you can access these two important CGT reliefs as part of your exit, retirement or succession planning.
Please feel free to contact Declan O’Luanaigh () to further discuss opportunities to avail of the 10% CGT rate and other tax opportunities for family / private company shareholders.