Capital Gains Tax (CGT) is a tax charged on the capital gain (profit) made on the disposal of any asset. It is payable by the person making the disposal. The gain/profit (the difference between the price you paid for the asset and the price you sold it for) is considered taxable income.
Budget 2017: A reduced Capital Gains Tax rate of 10% will apply to the disposal in whole or in part of a business up to an overall limit of €1 million in qualifying chargeable gains. Payments under the new raised bog restoration incentive scheme to relevant owners and rights holders will be exempt from Capital Gains Tax.
An asset is not just something you own outright, it may be an intangible asset. For example, goodwill in a company or an option over assets are considered assets. It can also be something you have an interest in, for example, a leasehold interest in land.
Disposing of an asset doesn't just refer to the sale of an asset for money. It includes any transfer of ownership by way of exchange, gift or settlement on trustees. Transfers of assets between spouses and civil partners are exempt from Capital Gains Tax. Transfers of assets between spouses and civil partners who are separated are exempt from Capital Gains Tax if they are made under a Separation Agreement or a court order. Read here for more information about tax and separation or divorce. The transfer of a site from parent to child for the purposes of constructing the child's principal private residence, where the site's market value does not exceed €500,000, is also exempt from Capital Gains Tax.
There is no Capital Gains Tax on assets passed on death. When the person who acquired the assets comes to dispose of them they are treated as if they had been acquired at their market value on the date of the death.
Gains or profit on the disposal of some assets are specifically exempted from Capital Gains Tax, these include:
The standard rate of Capital Gains Tax is 33% for disposals made on or after 5 December 2012.
|Disposals from:||Rate of CGT was:|
|7 December 2011 to 5 December 2012||30%|
|8 April 2009 to 6 December 2011||25%|
|15 October 2008 to 7 April 2009||22%|
|On or before 14 October 2008||20%|
A rate of 40% however, can apply to the disposal of certain foreign life assurance policies and units in offshore funds. Revenue provide a computation sheet for non-complex situations, to help you find out how much Capital Gains Tax you may have to pay (pdf).
For certain windfall gains the windfall gains rate of tax (pdf) is 80%.
Capital Gains Tax can be more complex than the examples above. For this reason you should get advice from Revenue (see 'Further information' below). Revenue also publishes a Guide to Capital Gains Tax (pdf).
The first €1,270 of taxable gains in a tax year are exempt from CGT. If you are married or in a civil partnership this exemption is available to each spouse or civil partner but is not transferable.
For 2009 and subsequent years the tax year is divided into a revised set of two periods:
For disposals in the initial period CGT payments are due by 15 December in the same tax year. CGT for disposals in the later period are due by 31 January in the following tax year.
For example, if you dispose of an asset in the period January to November 2017 you must pay the Capital Gains Tax due to Revenue before mid December 2017. If you dispose of an asset in December 2017 the Capital Gains Tax will be due on 31 January 2018.
For 2003 to 2008 the tax year was divided into two periods:
For disposals in the initial period CGT payments were due by 31 October in the same tax year. CGT for disposals in the later period were due by 31 January in the following tax year.
For example, if you disposed of an asset between 1 January and 30 September 2008 you must pay the Capital Gains Tax due to Revenue on or before 31 October 2008. If you disposed of an asset in the later period, that is, between 1 October 2008 and 31 of December 2008 you must pay the Capital Gains Tax due on or before 31 January 2009.
Send a cheque for amount of CGT due with a CGT payslip to the Collector General's office in Limerick.
There are two different disposal periods for CGT, this will determine the date payment is due and also which CGT payslip is required. Payslip A is for disposals in the ‘initial period’ and payslip B is for the ‘later period’. Contact Revenue for CGT forms.
You must submit a tax return on all disposals.
You must file a return on or before 31 October in the year following the tax year in which you disposed of the asset. Though you may file your return the following year, you must pay the Capital Gains Tax in the same year as the disposal of the asset, unless you dispose of the asset in the 'later period' (see 'Payment of Capital Gains Tax' above).
If you assess yourself for tax purposes (self-assessment) you should make a tax return on Form 11 (pdf). If you are a PAYE taxpayer you should make a return on a Form 12 (pdf). Trusts and Estates should make the return on a Form 1 (pdf). If you are not required to make an income tax return you must send a CG1 form to Revenue.
For further infomation on Capital Gains Tax, contact the Revenue Commissioners.
If you have a question relating to this topic you can contact the Citizens Information Phone Service on 0761 07 4000. The Phone Service will operate Monday to Friday, 9am to 6pm during January 2017. You can also visit your local Citizens Information Centre.