Recent Changes to Capital Taxes and Stamp Duty
14 February 2012Budget 2012 was announced on the 5th December and 6th December 2011. The new measures introduced in relation to Capital Taxes and Stamp Duty are briefly outlined below:-
Capital Acquisitions Tax
The rate of CAT (also known as gift and inheritance tax) has been increased from 25% to 30% with effect from 7 December 2011.
The Group A, Parent-to-Child tax-free threshold for CAT has been reduced from €332,084 to €250,000. It is likely that similar reductions to the other thresholds will be introduced in the Finance Bill.
The Group Thresholds which will apply to gifts and inheritances taken on or after 7th December 2011 are as follows:-
| Group | Relationship to Disponer | Group Threshold from 7/12/2011 |
| A | Son/Daughter | €250,000 |
| B | Parent*/Brother/Sister/ Niece/Nephew/Grandchild | €33,208 |
| C | Relationship other than Group A or B | €16,604 |
*In certain circumstances a parent taking an inheritance from a child can qualify for Group A threshold.
No changes have been made to business relief or agricultural relief (which if available allow for a reduction in the market value of business and agricultural assets of up to 90% for CAT purposes), however there is a possibility that the Finance Bill will make provision in this regard.
Capital gains tax
The rate of CGT was increased from 25% to 30% with effect from 7 December2011.
Where a property is bought between 7th December 2011 and the end of 2013, a new scheme has been introduced providing that property held during this period and held for at least 7 years, the gain attributable to that 7 year holding period will be relieved from CGT.
The Minister mentioned in the context of agri-businesses (including farms) thathe will be modifying CGT retirement relief which allows for the CGT freedisposal of farms and businesses to close family members will be amended in relation to agri-business (including farms) to encourage the transfer of such farms and businesses before the current owners reach the age of 66. The full details will not be available until the Finance Bill has been published but the provisions may be extended to other businesses and not just farming and agri-businesses.
The cap of €750,000 for CGT retirement relief in relation to transfers of businesses to non-family members will be reduced to €500,000 for individuals over 66.
Stamp duty
Current stamp duty arrangements for residential property will continue to apply with 1% on transactions up to and including €1 million and 2% thereafter.Multiple stamp duty rates for non-residential properties (including farmland, commercial and industrial buildings) will be abolished. The rate of stamp duty on non-residential property has been reduced to a flat rate of 2%.
Consanguinity Relief which allows a special 50% stamp duty reduction for transfers within families, was removed for transfers of residential property in Budget 2011 but will be totally abolished from 1 January 2015.
Section 23 reliefs – small investors
Reliefs in Section 23 type investments will continue at the present rate for investors with an annual gross income under €100,000. These small investors are regarded as being vulnerable to insolvency.
If you have any further queries please contact Michele Caulfield from our Probate, Estates and Wealth Management Group.
