Dáil Éireann Debate, Tuesday - 22 November 2022
244. Deputy Neale Richmond asked the Minister for Finance his views on whether it is appropriate that the capital gains tax allowance and capital gains tax in Ireland is vastly lower than that in Northern Ireland; if he will take steps to address this; and if he will make a statement on the matter. [57938/22]
View answerI assume the capital gain tax allowance the Deputy is referring to is the annual exemption for individuals in respect of the first €1,270 of chargeable gains in a calendar year that is provided for by Section 601 of TCA 1997.
In Northern Ireland, the UK capital gains tax free allowance applies, which for the tax year 2022-2023 is £12,300, which is deducted from the gain before the CGT due is calculated. It is clear that there is a difference between these two sums. However, in any comparison, there is a need to understand and take into account the specific details of various CGT systems in different jurisdictions in order to carry out a fair comparison. This includes examining special rates, and reliefs and exemptions, rather than focusing solely on the applicable headline CGT rate or in this instance a particular exemption or an allowance.
The current approach to CGT in Ireland is a flat rate of 33% for all gains, together with a range of targeted reliefs. The reliefs include the individual exemption of the first €1,270 of gains in a calendar year, as well as a range of other reliefs including principal private residence relief, retirement relief and revised entrepreneurs relief. More information on the reliefs for CGT are available at www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/what-is-exempt-from-cgt.aspx and www.revenue.ie/en/gains-gifts-and-inheritance/cgt-reliefs/index.aspx.
As the current exemption is available to each individual annually, this is a broad based relief that applies every year regardless of previous use, so any increase in the threshold could potentially result in significant costs to the Exchequer and would require offsetting measures. I do not currently propose to make any changes to the individual exemption of €1270.
However, as with all taxes, Capital Gains Tax (CGT) is subject to ongoing review, which involves the consideration and assessment of the rate of CGT and the relevant reliefs and exemptions.
