SELLING YOUR BUSINESS - Revised entrepreneur relief - 1 September 2021

RMcH states: the tax implications of potentially selling your business should be reviewed on an annual basis by/with your accountant,  to avoid un necessary high rates of exit tax.  One of the reliefs available (Entrepreneur relief) has a lifetime threshold of e1million at the present, above this sale amount there are also other options but please contact us.

Entrepreneur Relief

An individual only may claim relief from CGT in respect of a chargeable gain arising on the disposal of qualifying business assets.

There is a lifetime limit of €1 million on the gains made on or after 1 January 2016 that you can claim relief on. If you can claim this relief, you will pay CGT at the rate of 10% on gains from the disposal of business assets. This is reduced from the normal rate of 33%. Up to 31 December 2016, gains from such disposals are charged at 20%.

The qualifying business assets must have been owned by that individual for a continuous period of 3 years in the 5 years immediately prior to the disposal of the assets.

Where a business is carried on by a company, individuals seeking to qualify for the relief must own not less than 5% of the ordinary shares in the qualifying company or 5% of the ordinary shares in a holding company of a qualifying group.

The individual must have been a director or employee of the qualifying company (or companies in a qualifying group) who is or was required to spend not less than 50% of his or her time in the service of the company or companies in a managerial or technical capacity and has served in that capacity for a continuous period of 3 years in the 5 years immediately prior to the disposal of the chargeable business assets.

The relief does not apply to the following assets:

• shares, 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

Subject to the conditions of the relief being met, the relief can be granted in the following scenarios:

• Share buybacks
• Company liquidations
• Double holding company structures
• Partnership assets