CASE STUDIES

No Retirement Relief

Joe Farmer is 60 years of age disposes of land for €1.2m and satisfies all of the conditions of both Entrepreneur Relief and Retirement Relief. Assuming a base cost of €400,000 which includes allowable deductions and his personal exemption, we will look at Joe’s CGT liability under the following headings;

Normal CGT treatment with no relief

In the absence of any relief the taxable gain is €800,000 giving rise to a liability at 33pc of €264,000.

Claiming Retirement Relief

Assuming Joe is over 55 and under 66 he may claim retirement relief on €750,000 of the gross proceeds and marginal relief on the remainder. This will give rise to a liability of €225,000 so he saves € 39.000 by claiming Retirement Relief.

Claiming Entrepreneur Relief

As Joe’s gain is less than €1m his liability works out at 10pc of €800,000, i.e., €80,000, so he saves €184,000.

Conclusion

As the tax due under Entrepreneur relief is less than Retirement relief there is no Retirement relief and the lower CGT liability of €80,000 is due.

Taxable gain

Peter Farmer is 70 years of age and disposes of land for €530,000 and satisfies all of the conditions of both Entrepreneur Relief and Retirement Relief. Assuming a base cost of €200,000 which includes allowable deductions and his personal exemption, we will look at Peter’s CGT liability under the following headings;

Normal CGT treatment with no relief

In the absence of any relief the taxable gain is €330,000 giving rise to a liability at 33pc of €108,900,

Claiming Retirement Relief

Peter may claim retirement relief exemption on €500,000 with the balance of €30,000 being subject to 50pc tax, so his liability is €15,000.

Claiming Entrepreneur Relief

Peter’s taxable gain is €330,000 so his liability works out at 10pc, i.e., €33,000.