Finance Bill 2023 introduces changes to CGT retirement relief for individuals.
The Finance Bill 2023 introduced amendments to Section 599 of the Taxes Consolidation Act 1997 regarding Capital Gains Tax Retirement Relief (RR). RR generally offers relief from CGT on the sale of trading assets or shares in trading companies for individuals over 55 who have owned the assets for a decade and worked in the business for at least ten years, with five of those years being full-time.
Section 599 specifically pertains to relief on disposals to a child (as defined in Section 599). Previously, if the individual selling the qualifying assets was between 55 and 65 years old and the sale was to their child, full relief could be claimed. The Bill raises the upper age limit from 65 to 69. However, a new cap of €10 million will be imposed on relief claims when the individual selling the assets to their child is aged between 55 and 69. It’s important to note that this €10 million cap is not per child but rather a collective limit.
For disposals occurring from age 66 onwards, the existing €3 million cap on relief will now apply if the individual is 70 or older. Below is a summary of the updated and somewhat complex rules:
| Age of person disposing to family member | Period to 31 December 2024 | 1 January 2025 onwards |
| Age 55 to 65 | No limit on qualifying proceeds | €10,000,000 limit applies |
| Age 66 to 69 | €3,000,000 limit applies | €10,000,000 limit applies |
| Age 70+ | €3,000,000 limit applies | €3,000,000 limit applies |
What should you do?
- Individuals aged 65 at any time up to 31 December 2024 should consider transferring trading assets before the end of that year if the market value exceeds €10 million.
- Individuals aged 66 with a business valued over €3 million should wait until 1 January 2025 to transfer any trading assets.
- For individuals already over 70 years of age, the changes do not make any difference.
Disposals to third parties
Further changes have also applied to Section 598, which relates to disposals to third parties rather than family.
For disposals occurring from age 66 onwards, the limit will be increased to €750,000 from 1st January 2025. Below is a summary of the updated figures:
| Age of person disposing to family member | Period to 31 December 2024 | 1 January 2025 onwards |
| Age 55 to 65 | €750,000 limit applies | €750,000 limit applies |
| Age 66 to 69 | €500,000 limit applies | €750,000 limit applies |
| Age 70+ | €500,000 limit applies | €500,000 limit applies |
What should you do?
- Individuals aged 66-70 with a business valued between €500,000 & €750,000 should wait until 1 January 2025 to transfer any trading assets.
- For individuals aged 55-65 or already over 70 years of age, the changes do not make any difference.
If you have any questions regarding the above information or would like to discuss this topic further, please don’t hesitate to contact a member of the Xeinadin corporate tax team below.
