Revised Entrepreneur Relief

About this scheme

Revised Entrepreneur Relief reduces the Capital Gains Tax rate on gains from disposing of qualifying chargeable business assets to 10%, down from the standard 33% rate. It replaced the earlier Entrepreneur Relief that applied for 2014 and 2015. Relief is capped at a lifetime limit of gains, with only gains from 2016 onward counting toward the limit. Qualifying assets are shares in a trading company (or holding company of a qualifying group) held by an individual, or assets owned and used by a sole trader in their trade; the claimant must have owned the assets (or at least 5% of the relevant shares) for a continuous 3-year period within the 5 years before disposal, and — where the business is run through a company — have spent at least half their time working for it in a managerial or technical role over that period. The relief excludes investment assets, development land, and certain related-party transactions, unless the disposal is for genuine commercial reasons. Claimants calculate their chargeable gain as normal, apply the reduced rate, and file through the standard CGT return process.

Who can apply

• Applies to gains from the disposal of qualifying chargeable business assets, taxed at a reduced CGT rate of 10% (versus the standard 33% rate; the rate was 20% for disposals between 1 January and 31 December 2016)
• Lifetime limit: relief is available on the first €1,000,000 of qualifying gains arising between 1 January 2016 and 31 December 2025, rising to €1,500,000 for gains arising on or after 1 January 2026; only gains on disposals made on or after 1 January 2016 count toward the limit
• Excluded from relief: shares/securities/other assets held as investments (other than shares qualifying under this relief); development land; assets on which no chargeable gain would arise; assets personally owned outside a company but used by the company; goodwill disposed of to a connected company; and shares/securities in a company where the individual remains connected to the company after disposal — though the last two may still qualify if the disposal is for genuine commercial reasons and not tax avoidance
• The claimant must have owned the qualifying business assets for a continuous period of at least 3 years within the 5 years immediately before disposal (for shares, at least 5% of ordinary shares held continuously for 3 years, at any time before disposal)
• The business asset must be used in a 'qualifying business' — i.e. not the holding of securities/assets as investments, holding of development land, or development/letting of land
• Where the business is operated by a company, the claimant must own at least 5% of the ordinary shares in the company or a holding company of a qualifying group; relief does not apply where there is a dormant company in the group or a non-trading subsidiary
• Where the claimant is a director or employee, they must have spent at least 50% of their time in a managerial or technical capacity in service of the qualifying company/companies, for a continuous period of 3 years within the 5 years before disposal

How to apply

1. 1Confirm the disposal qualifies as a chargeable business asset held for the required ownership/service periods, and calculate the chargeable gain as normal (sale price or market value, less allowable acquisition and disposal costs).
2. 2Apply the reduced 10% CGT rate (instead of the standard 33% rate) to the qualifying gain, up to the applicable lifetime limit (€1,000,000 for gains arising between 1 January 2016 and 31 December 2025; €1,500,000 for gains arising on or after 1 January 2026).
3. 3File a CGT return (Form CG1, or through ROS/myAccount as part of your Income Tax return) and pay any CGT due by the standard payment and filing deadlines, even though the relief reduces the amount payable.