I am 63 years old and continue to run my own retail business through a private limited company. I hope to sell this business or maybe pass it on to one of my children in the next few years. I have heard that I should be able to avail of Retirement Relief. I have also read recently that some of the limits for retirement relief have changed. Can you please inform me about these changes?
Current Irish tax legislation, subject to certain conditions, allows individuals over 55 such as yourself to dispose of their business, valued at up to €750,000, tax free. There is no limit on disposals from a parent to their child. As you have stated, this relief is known as retirement relief. In broad terms retirement relief is a relief given to an individual on the disposal of all or part of the qualifying assets of his business, this includes shares in a family company, provided he is aged fifty-five years or more at the date of disposal. In order for the sale of shares to qualify for this relief, the shares in question must be shares in a family company.
With effect from 1 January 2014, individuals aged 66 years and over are subject to ceiling limit of €500,000 for full CGT retirement relief. Also, as things currently stand, a parent can dispose of or gift qualifying assets to their child and avail of retirement relief in respect of the full value of the property. However, Finance Act 2012 introduced a limit of €3,000,000 for individuals who reach the age of 66 and transfer assets on or after 1st January 2014.
Given these upcoming changes, I would advise that you now consider the value of the shares you wish to dispose of, with a view to availing of the limits as they currently stand or enacting any transfer before your 66th Birthday. Particularly, as the limits outlined are lifetime limits and CGT will apply to the full amount, subject to marginal relief, should these limits be passed?
This is a very complex area, and it is important to ensure it is dealt with correctly and in a tax efficient manner. With this in mind, I would advise that you seek professional advice from a qualified tax consultant to allow you to best avail of all potential reliefs currently available to you.