This relief gives a CGT rate of 10% on gains from the disposal of qualifying business assets. This is reduced from the normal rate of 33%.

There is a lifetime limit of €1 million on the gains that you can claim relief on. Only gains on disposals made on or after 1 January 2016 are counted in the limit.

The relief does not apply to disposals of:

• shares (other than shares that qualify for relief under this section), securities or other assets held as investments
• development land
• assets on the disposal of which no chargeable gain would arise
• assets personally owned outside a company, even where such assets are used by the company
• goodwill which is disposed of to a connected company
• shares or securities in a company where the individual remains connected with the company following the disposal.

How do you qualify for the relief?

You must have owned the business assets for a continuous period of three years. The three years must be in the five years immediately prior to the disposal. The business asset must be used for a qualifying business. In the case of shares, you must have owned at least 5% of the ordinary shares for a continuous period of three years. The three-year period can be at any time prior to the disposal.

Qualifying business assets

Qualifying business assets are:

• shares held by an individual in a trading company
• owned by a sole trader and used in their trade.

Qualifying business

A qualifying business is a business other than the:

• holding of securities or other assets as investments
• holding of development land
• development or letting of land.

Qualifying business operated by a company

Where a business is operated by a company you must have owned at least 5% of the ordinary shares in either:

• the company
• a holding company of a qualifying group.

This means that the relief would not apply where:

• there is a dormant company in a group
• one of the subsidiaries is not a trading company.

Qualifying company operated by an individual

You must have been a director or employee of the qualifying company or companies in a qualifying group. You must have:

• spent no less than 50% of your time in the service of the company (or companies) in a managerial or technical capacity
• served in that capacity for a continuous period of three years. The three years must be in the five years immediately prior to the disposal of the business assets.

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