For self-employed individuals, the business itself is often the biggest retirement asset. Exiting or passing it on tax-efficiently is critical.
Retirement Relief (CGT)
- Available from age 55.
- Third-party disposals: Full relief up to €750,000 (55–70), €500,000 (70+).
- Transfers to children: Cap €10m (55–69), €3m (70+).
- Clawback if child disposes within 12 years.
Example – Sole Trader Sale (Age 58)
- Sale value €900,000, base cost negligible.
- Relief threshold = €750,000.
- Over by €150,000 → Marginal Relief caps CGT at ½ × (€900k − €750k) = €75,000.
- Standard CGT = €297,000. Relief saves €222,000.
Entrepreneur Relief (CGT)
- 10% rate on lifetime gains up to €1m.
- Conditions: 3 years ownership, working director, ≥5% shareholding.
- Balance taxed at 33%.
Example – Director Sale (Age 62)
- Sells shares for €1.4m.
- €1m @10% = €100,000.
- €400k @33% = €132,000.
- Total CGT = €232,000.
Transfers to Children
Example: Director (Age 60) transfers €9m company to child
- Cap €10m (55–69).
- CGT = €0.
- If child disposes within 12 years, clawback may apply.
*All examples here are full illustrative purposes only. Rockwell Financial Management are not tax advisors and it is imperative you seek tax advice from a qualified tax advisor before committing to any tax planning strategy
Key Takeaway
Timing and structuring matter. Retirement Relief can reduce CGT to almost nothing, while Entrepreneur Relief provides a backup at 10%. Professional tax advice is essential.
