As the deadline for Capital Gains Tax (CGT) payments approaches, it is essential for individuals, partnerships and sole traders in Ireland to ensure they are prepared. The key date for your diary is 31st January 2025, the deadline for paying CGT on chargeable gains made during the period from 1st December to 31st December 2024.
If you have sold assets such as property, shares, or other investments and made a profit during this time, you may owe CGT. As your trusted advisors, we can guide you through what you need to do to stay compliant and avoid unnecessary penalties.
What is Capital Gains Tax (CGT)?
CGT is a tax on the profit (or "gain") made from the sale or disposal of certain assets. You are only taxed on the gain, not the entire amount you receive.
For example, if you purchased an asset for ā¬50,000 and sold it for ā¬70,000, the gain subject to CGT would be ā¬20,000.
The current CGT rate in Ireland is 33%. However, there are various reliefs and exemptions available that can help reduce your liability.
Ā When to Pay Your CGT
For disposals made between:
1 January and 30 November (the initial period), you must pay CGT by 15 December of the same year
and
1 December and 31 December (the later period), you must pay CGT by 31 January of the next year.
For disposals made under a written contract, the time of disposal is usually the date of the contract.
Key Exemptions and Reliefs
Annual Exemption: Each individual is entitled to an annual CGT exemption of ā¬1,270. This means the first ā¬1,270 of your gains in a year are tax-free.
Principal Private Residence Relief: If youāre selling your main home, the gain is usually exempt from CGT, provided specific conditions are met.
Entrepreneur Relief: This allows qualifying individuals to pay a reduced rate of 10%Ā on gains from the disposal of certain business assets, up to a lifetime limit of ā¬1 million.
Steps to Take Before the January Deadline
Review Your Transactions: Identify any disposals made during the period 1st December to 31st December of the previous year. Calculate the gains or losses for each transaction.
Apply Reliefs and Exemptions: Ensure you take full advantage of any applicable reliefs, such as the annual exemption or specific reliefs for certain asset types.
File and Pay on Time: Use Revenueās Online Service (ROS) to file and pay your CGT. Late payments can result in interest charges of 0.0219% per day, and penalties may also apply.
Why Early Action Matters
Leaving your CGT preparation until the last minute can lead to unnecessary stress and the risk of errors. Early planning allows you to:
Fully evaluate potential reliefs.
Ensure all documentation is in order.
Avoid penalties or interest for late payments.
Need Help? Weāre Here for You
CGT calculations can be complex, especially if youāre dealing with multiple transactions or intricate reliefs. Our team is here to help you navigate these complexities, ensuring your liabilities are accurately calculated and submitted on time.
Donāt hesitate to get in touch if you need assistance or have any questions about your CGT obligations.
Source: Revenue.ie