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Business Relief

  1. Overview
  2. What are the conditions for Business Relief?
  3. What is relevant business property?
  4. Businesses which do not qualify for relief
  5. How do you calculate the relief amount?
  6. Minimum ownership period of business property
  7. Circumstances in which relief can be withdrawn
  8. How do you claim Business Relief?

How do you calculate the relief amount?

The taxable value of the relevant business property is reduced by 90%.

You calculate the taxable value by deducting from the market value of the relevant business property:

  • liabilities
  • costs
  • expenses
  • and
  • any consideration.

Consideration is the amount of money or money's worth paid by the person receiving the gift or inheritance, towards the business property.

Excepted assets

Certain assets, known as 'excepted assets', are not included in the 90% reduction when calculating the taxable value. These are:

  • assets not being used for the purposes of the business
  • assets purchased more than two years before the gift or inheritance, and not used wholly or mainly for the purpose of the business. 'Wholly or mainly' means more than 50%
  • and
  • any new business bought by a company within the minimum ownership period. This does not apply if the new business is fully or partially replacing the existing business.
  • Example 1

    Michael inherited the family business on the death of his father on 1 May, 2016. The taxable value of the business was €400,000.

    Calculate Business Relief
      Value
    Taxable value before relief €400,000
    Less Business Relief (90% of taxable value) €360,000
    Taxable value after relief €40,000

     

  • Example 2

    Tom transferred the family business to his daughter Anne on 10 April, 2017. The market value is €4,000,000. Liabilities, costs and expenses amount to €20,000. Anne provided €55,000 in consideration.

    Calculate Business Relief
      Value
    Market value

    €4,000,000
    Less liabilities, costs and expenses

    €20,000
    Less consideration

    €55,000
    Taxable value before relief

    €3,925,000
    Less Business Relief (90% of taxable value)

    €3,532,500
    Taxable value after relief

    €392,500

     

  • Example 3

    Ciarán, who owns all of the shares in STU Ltd, gifts all of his shares to his daughter Liz. The taxable value of the shares before applying the relief amounts to €950,000. This includes quoted shares valued at €50,000 which are held as an investment.

    The shares are not used for the purposes of the business (excepted assets). The value of the shares will need to be ignored when calculating Business Relief.

    Calculate Business Relief
      Value
    Taxable value prior to relief

    €950,000
    Less excepted assets

    €50,000
    Amount of taxable value that can benefit from the relief

    €900,000
    Less Business Relief (90% of taxable value)

    €810,000
    Taxable value of qualifying assets (after relief)

    €90,000
    Add taxable value of excepted assets

    €50,000
    Taxable value of Liz’s benefit

    €140,000

     

Next: Minimum ownership period of business property

Published: 08 August 2024 Print this page

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