Budget 2024 proposed some changes to Capital Gains Tax and introduced a new Capital Gains Tax Relief. Full details are below.
Capital Gains Tax (CGT)/Capital Acquisitions Tax (CAT)
The current rates of 33% remain unchanged.
CAT Group Thresholds
The Minister confirmed that Group B threshold would be extended to include Foster Children.
Retirement Relief
Retirement Relief is a relief from CGT that arises on the disposal of certain business assets and shares in certain companies. To avail of the relief an individual has to have reached the age of 55 and satisfy various conditions. Under the current legislation once an individual has reached the age 66 there is a €3 million limit on the relief where the qualifying assets are transferred to the individual’s children or certain others.
From 1 January 2025 this age limit condition for the transfer of chargeable assets to children and to others will increase from 66 to age 70.
Also from 1 January 2025, there will be a new limit of €10 million on the relief available for disposals to a child up until the age of 70.
Revised Entrepreneur Relief
The Department of Finance is to examine opportunities to refocus this relief with a view to further improving the incentives for founders and entrepreneurs in the innovative start-up phase, and to ensure it is contributing to employment creation.
Angel Investor Relief
This new relief is being introduced to encourage angel investment in innovative start-ups, in line with the recommendation from the Commission on Taxation and Welfare.
The relief will be available to an individual who invests in an innovative start-up small and medium enterprise (SME) for a period of at least 3 years. The investment by the individual must be in the form of fully paid-up newly issued shares costing at least €10,000 and constituting between 5% and 49% of the ordinary issued share capital of the company.
The scheme will include a certification process, which will be carried out by Enterprise Ireland, to ensure the relief is targeted at innovative SMEs that can demonstrate financial viability and compliance with the requirements of the EU General Block Exemption Regulation.
Qualifying investors may avail of an effective reduced rate of CGT of 16%, or 18% if through a partnership, on a gain up to twice the value of their initial investment. There is a lifetime limit of €3 million on gains to which the reduced rate of CGT will apply.
The full details of this new relief will be available when the Finance Bill is published.
Please contact Robert Lohan rlohan@dhkn.ie if you have any queries in relation to Budget 2024.
This newsletter is intended as a general guide to the subject matter and should not be used as a basis for decisions. Whilst every effort has been made to ensure the accuracy of the content, no liability can be taken for any omissions or errors. Professional taxation advice should always be taken prior to proceeding with any transaction giving rise to tax consequences.
