The acquisition of land by way of compulsory purchase order is the disposal of an asset by the landowner for the purposes of Capital Gains Tax (CGT). Any chargeable gain arising on such a disposal is subject to CGT at a rate of 33%. The first €1,270 of total chargeable gains in respect of an individual in any year of assessment is exempt.
Should the landowner meet the conditions of the revised CGT entrepreneur relief in respect of the disposal, a lower CGT rate of 10% may apply, subject to a lifetime limit of €1m.
The disposal for CGT purposes will occur by reference to the date on which the compensation proceeds are received and any CGT liability arising will be payable by reference to that date. Where the compensation is received between 1 January and 30 November, any CGT liability must be paid by 15 December of the same year. Where the compensation is received between 1 December and 31 December, any CGT liability must be paid by 31 January of the next year.
A self-assessment tax return should be completed and returned to Revenue on or before 31 October in the year after the date of disposal. The obligation to make a return exists even where no tax is due because of the use of reliefs or allowable losses.