Retirement relief tool

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How it works

Retirement relief applies where a person aged 55 or more and disposes of a farm or business. Retirement relief is subject to a "bona-fide commercial reasons" anti-avoidance test.

Meaning of qualifying assets

Business:

  • Chargeable business assets, i.e., assets including goodwill, but not shares or investments used in the trade (including farming) carried on by you or your family company. You must have owned the assets throughout the 10 year period ending on the disposal date.

  • Shares in a family company, i.e., a trading company, farming company or holding company in which you hold at least 25% of the voting rights. If you do not, you must have at least 10% of the voting rights, and, together with your family, have at least 75% of the voting rights.

  • You must also have been a working director of the family company for the 10 year ownership period, and for not less than five years of that 10 year period, you must have been a full-time working director, i.e., required to devote substantially the whole of your time to the company in a managerial or technical capacity.

Farm:

  • Land, machinery and plant held by you for not less than 10 years ending on the disposal date, which:
    • was used throughout the 10 years period by the family company, and
    • is disposed of at the same time to the person who is buying the shares in the family company.

  • Let farm land provided:
    • it is let under the EU Early Retirement from Farming Scheme, and immediately prior to such letting, it was owned and farmed by the lessor for at least 10 years,
    • it is compulsorily acquired, is let during the 5 years preceding the disposal, and prior to such letting, was owned and farmed by the lessor for at least 10 years,
    • the disposal is to a child and it was farmed prior to letting.
    • the land was let for a minimum of 5 years in the 25 year period ending with the disposal of which must be before 31 December 2006.

Calculting 10 year ownership period
When calculating the 10 year ownership period for the qualifying assets, you may include:

  • your spouse’s ownership period,
  • in the case of assets that qualified for rollover relief, the ownership period of the old assets,
  • in the case of assets that qualified for relief on transfer of a business to a company, the pre-corporate ownership period, and this period also counts as time being a full-time director,
  • in the case of a spouse who has died, the deceased spouse’s pre-death period as a full-time working director,
  • must be calculated as a period for which you were a full-time working director.