Maximising tax relief on pension contributions
Advising on use of tax reliefs for investing, such as EIIS and SEED Capital relief investments and how these can be used to reduce your income tax liability
(e.g. exit taxes on funds, tax on UCITS and ETFs)
Advice on passing wealth to next generation and options to provide income to family members through family partnerships or other family structures such as trusts
If you sell a capital asset you own personally, you may be liable to Capital Gains Tax (“CGT”). The current rate of CGT is 33% on the gain on disposal of the asset. We review the history of the asset to ensure you are claiming the maximum amount of deductions when calculating the gain on disposal. We also review and advise you on your entitlement to the various CGT tax reliefs and allowances available. These include:
Allows you to receive up to €750,000 tax free on disposal of qualifying assets. This relief is available to individuals who are over 55 years of age and have owned the asset for at least 10 years. The asset must be an asset used in a trade or shares in a company carrying on a trade. If the asset is shares in a trading company you must also have been a director of the company for at least 10 years and full time working director for at least 5 years.
Applies a reduced rate of 10% on the first €1 million of a gain on the disposal of qualifying assets. The assets must have been owned for at least 3 years and for shares in a company, you must have spent at least 50% of your working time in the business in a managerial or technical capacity.
An exemption from CGT is available on a gain on the sale of your principal home provided you lived it was your principal home throughout your period of ownership. If the home was occupied as your principal home for a period of your ownership you may be able to claim an exemption for the period it was occupied as your principal home. You may also be able to claim for periods where you did not live in the property due to work requirements and also the last 12 months of ownership of the property.
There is an exemption for qualifying property acquired between 7th December 2011 and 31st December 2014 which is held for at least 4 years. The first 7 years of a capital gain arising on this property may be exempt from CGT. If the property is held for more than 7 years the gain under this relief is split between an exempt gain and a taxable gain. For example, if the property is held for 10 years, 7/10ths of the gain would be exempt and 3/10ths of the gain would be taxable.
if you have made a loss on a previous disposal of an asset, you may be able to offset this loss against a future capital gain.
If you receive a gift or inheritance you may be liable to Capital Acquisitions Tax (“CAT”). The current rate of CAT is 33% which is payable when the total value of gifts and inheritances received exceed the tax free thresholds. The tax free threshold available depends on your relationship with the person giving the gift or inheritance. The current tax free thresholds are:
Applies to gifts and inheritances received from parents
Applies to gifts and inheritances received from grandparents, uncles, aunts, lineal descendants
Applies to all other gifts and inheritances
An annual exemption is available on the first €3,000 of a gift (but not an inheritance) from an individual and this does not reduce the above tax free thresholds.
There are also a number of reliefs available which can significantly reduce any CAT liability. These include:
Reduces the taxable value of qualifying agricultural property by 90%.
Reduces the taxable value of qualifying business property by 90%
allows a nephew or niece use the Group A tax free threshold on qualifying gifts or inheritances from their Uncles or Aunts
Provides for an exemption on the inheritance on certain dwelling properties in limited circumstances
Careful tax planning is required to ensure these reliefs are maximised and to avoid large unexpected tax liabilities arising on the death of a family member.
Barry McCarthy
Director
Taxation Services
Deborah Drought
Partner
Taxation Services
