The main tax reliefs to be considered when business owners are planning for retirement or succession include the following:
- Capital Gains Tax
- Retirement Relief – there are several conditions to consider. The main conditions to consider for example include age (claimant must be 55 years old or older); must own assets for 10 years prior to retirement; must be mainly trading (investments excluded); working director condition to be met; claimant ownership test must be met.
- Entrepreneur Relief – subject to meeting all the conditions, the CGT rate is reduced to 10% for the first €1m of gain.
- Capital Acquisitions Tax – Business Relief available where transferring the business to children (for example, as a gift). This relief can reduce the value of the gift by 90% however there are conditions which must be met to qualify for the relief.
- Buy back of shares where available (refer to Section 130, TCA 1997 and company law). Conditions exist to avail of the share buyback.