capital gains tax allowance, difference between ireland and uk

Ive just noticed that there is big discrepancy between capital gains allowance in britain and ireland. In Ireland you are only allowed 1270euros tax free capital gains whereas in britain you are allowed around £10,000 tax free allowance per year. It got me thinking if I have alot of investments which are doing well it is much better to be resident in Britain, even to such an extent as to move to britain for this reason. Afterall over a 10 year period you would be allowed £100000 tax free capital gains in britain but only 12000euro in Ireland. Anybody else with thoughts on this

Hi Joe,

I'm no expert on this but I understand you are generally correct. However, I think you need to cease being ordinarily resident in Irl (which is to basically be out of Irl most of the time for 2-3 years?) before you could escape liability to Irish CGT.

To take an example, if you were to dispose of £10,600 (the current UK CGT limit) of income per year in the UK, you would pay no CGT.

If you were to dispose of the same amount in Ireland, €12,450, you would pay €3690 per year. Not really worth the effort, I think.

Note: The UK CGT allowance is not available in certain circumstances to those not domiciled in the UK, but I not sure of the details of this.

its still a big difference and not something you hear much about, but also the actual capital gains tax is a lot lower too, maybe its because of the importance of financial industry to the british economy.

Hi Joe

When I saw your post first, I had assumed that you were wrong. As it was integrated with the income tax system in the UK, I thought that the effective rate was a lot higher.

But this was based on the old Irish rate of 20%. Now the Irish rate is 33% , it's far more severe. I think that the UK CGT rate may have been higher in the past.

Here is an example from the UK

Example one - a simple example

Mr P's total income, after deducting allowances and reliefs, is £20,000 and his capital gains, after reliefs, are £15,000.

The basic rate band is £35,000. Mr P has used £20,000 of this amount against his income - so has £15,000 remaining.

As his gains are only £15,000, he has enough of the basic rate band remaining to cover his gains, so they are all to be taxed at 18 per cent.

He now deducts his tax-free allowance of £10,600 and pays Capital Gains Tax at 18 per cent on £4,400.


CGT bill in UK : £792

Click to expand...

An Irish resident would pay...
Gain £15,000
Exempt: £1,000 (€1,270)
Taxable: €14,000
CGT in Ireland @ 33%: £4,620

The Marginal rate of CGT is less stark, but still significant
After you have used up your exemptions and lower income tax bands in the UK, the rate is 28% compared to 33% in Ireland.

The UK effective rate is reduced further by ...
Gains within ISAs and PEPs are exempt

There may be other differences worth considering.

In Ireland all gains disappear on death. Is this the same in the UK?
The family home is "usually exempt" in the UK. I don't know in what circumstances it is not exempt.

Hi brendan, thanks for that, so in britain capital gains tax is lumped in with general income?

so in a hypothetical case where you had no income just capital gains, in ireland if you earned 10,000 euros you would still pay 33% cgt tax on 8730 euros which is 2910

whereas in britain if you earned £10000 capital gains you would not pay any tax at all.

So in ireland capital gains is more onerous on lower income earners because no account is taken of whether a lower or higher income earner has made the capital gain whereas in britain the two are combined and if the person has earned little other income he pays a much reduced cgt. This is now my understanding, am i correct in this analysis

And remember that the annual capital gains tax exemption is per Spouse with independent taxation.

I had several client's in the UK with ISA portfolios of several hundred thousand pounds from which they could take a tax free income, in addition to their annual income tax exemptions ,and a combined annual capital gains tax exemption of £20,000 each year for the family.

In addition by putting capital into a special form of trust it is also possible to take a tax efficient income and avoid Inheritance Tax.

It is so much easier to plan investment capital in the UK than it is in Ireland.