CGT is
a tax on a capital gain arising
on the disposal of assets owned
by you. At its simplest, deducting
the price you paid for an asset
when you acquired it from the
sale proceeds when you dispose
of it gives you the chargeable
capital gain.
In calculating the amount of
tax payable, deductions are
allowable for incidental costs
of acquisition, such as solicitor’s
fees, stamp duty etc. and incidental
costs of disposal such as, solicitors/auctioneers
fees etc. In addition, where
an asset was acquired before
2003, inflation relief may be
available, effectively adjusting
the cost in line with a published
inflation factor.
Are
any Gains exempt from CGT?
Gains on the
disposal of some assets are specifically
exempted from CGT. These include:
Gains on the disposal of
property owned by you (house,
apartment, etc.) which was
occupied by you or by a dependent
relative as a sole or main
residence. Restrictions may
apply where the property was
not fully occupied as a main
residence throughout the period
of ownership or where the
sale price reflects development
value.
Gains from betting, Lotteries,
sweepstakes, bonuses payable
under the National Instalments
Savings Scheme and Prize Bond
winnings
Gains on Government Loans
and Debenture issued by certain
Semi-state bodies
Gains on disposal of wasting
chattels (e.g., animals, private
motor cars, etc.)
Gains on Life Assurance
policies (unless purchased
from
another person or taken out
with certain foreign insurers
on or
after 20 May 1993)
Gains made by individuals
on tangible moveable property
where the consideration does
not exceed £2,540
Capital
Tax Rates
The standard
rate of CGT is 20%. Exceptionally,
a rate of 40%
applies on disposals of certain
foreign life assurance policies
and units in offshore funds.
Personal
Exemption
The first
€1,270 of taxable gains by
an individual in a tax year are
exempt. In the case of a married
couple this exemption is available
to each spouse but is not transferable.
Retirement
Relief
A gain on
the disposal of a business or
farm by an individual aged 55
years or older for a consideration
not exceeding €500,000 is
exempt from capital gains tax.
There is no limit where the disposal
is to a child or a niece/nephew
that works in the business. Marginal
relief applies where the consideration
does not greatly exceed that amount.
Where the disposal is made to
a child of the individual (or,
in certain circumstances, to a
nephew or niece), the gain is
exempt irrespective of the amount
of the consideration. This relief
also applies to the disposal of
a family business where the business
consists of a group of companies
having at their head a holding
company.
Roll-Over
Relief
With
effect from 4 December, 2002,
rollover relief will no longer
be available on any disposal.
Indexation
Relief
Where an
asset was acquired before 2003
inflation relief may be
available, effectively adjusting
the cost in line with an inflation
factor. Where a disposal is
made on or after 1 January 2003,
the indexation relief will only
apply for the period of ownership
of the asset up to 31 December
2002.
