There are many issues to consider when retiring from your business, including tax. Warren & Partners can advise you on tax-efficient strategies for passing your business to the next generation.
The transfer of a business can trigger several taxes such as Capital Gains Tax (CGT), Capital Acquisitions Tax (CAT) and Stamp Duty. However, tax reliefs and exemptions are available which may mitigate (or eliminate) liabilities when passing on business assets to your children, provided certain criteria are satisfied.
We can help you identify tax reliefs and exemptions that may be available to you or your family.
The disposal of some or all business assets can result in significant personal CGT liabilities arising for shareholders.
If you are 55, or over, we can assist you in availing of CGT Retirement Relief for eligible assets, to significantly reduce your CGT liability. If Retirement Relief is not available, CGT Entrepreneur Relief may be available to reduce the CGT rate applicable to any gain from 33% to 10% on a significant portion of the proceeds.
It may also be possible to exit your business in an efficient manner via Share Buyback. Where certain criteria are satisfied, it is possible to avail of CGT treatment (as opposed to Income Tax treatment) on an exit from a business structured in this way. We can assist you in identifying whether CGT relief is available and how a Share Buyback should be implemented.
When passing some or all business assets to a child, a CAT liability will also arise for that child. However, it is possible to obtain relief from CAT under Business Asset Relief. If all the relevant criteria are satisfied, the taxable value of the business assets received may be reduced by up to 90%, resulting in a significant tax saving.
It is also possible for a child’s CAT liability to be further reduced where CGT has already been suffered by the parent on the disposal of those business assets.
If you would like to discuss any of the above tax reliefs or exemptions, please contact a member of our team.
If you would like to know more about Inheritance & Gift Tax, please click here.
Warren & Partners are a boutique Irish tax and business advisory firm based in Ballsbridge, Dublin. Our experienced-team of tax advisors will create unique tax solutions for your specific business needs.