Retirement Relief(Non child)

Emperor1989

Hello Folks,

RR for non kids is wrecking my head and need help. I know its 750,000 limit and marginal relief over that but every solution i look at it seems that some qualify for marginal relief and some don't(too big CGT Liability).

I keep seeing half the excess but don't fully understand. I know its very simple.

Help:D

Vaioer

Think about it this way.

You are due to get €1m which you hope to get retirement relief. As you say, it is capped at €750,000.

As €1m is more than this there is marginal relief, which is the lower on
- The actual CGT on the assets
- 50% of the excess of the proceeds.

Proceeds(€1m-€750k)= €250k
50% of this = €125k

CGT(assume all assets are qualifying)= 25% on the €1m, €250k.

Therefore in this case you have a liability of the €125k

Emperor1989

Say for example its 5.8 Million.

What happens their??. In an example i got it was just 5.8 million X 25% and that was the CGT liability

barneystinson

Emperor1989 wrote: »

Say for example its 5.8 Million.

What happens their??. In an example i got it was just 5.8 million X 25% and that was the CGT liability

It depends on what the base cost is for starters.

Say the base cost of the assets is 250k after indexation.

So under ordinary CGT rules the calculation is (5.8m - 250k) x 25%, which is 1.388m.

Alternatively, you can see if marginal relief gives a better outcome. Base cost is irrelevant here, so it is (5.8m - 750k) x 50%, which is 2.53m.

So in that scenario there is no benefit to retirement relief.

Emperor1989

That is great thanks.