Selling Glanbia shares? What the tax implications could mean for you

Capital Gains Tax (CGT)

CGT is a tax on the uplift in value of an asset at the point of disposal from the time of acquisition. This gain is then taxed at 33%. For shareholdings in public companies an individual is not entitled to any relief on this gain with the exception of the annual exemption of €1,270. Under this exemption, an individual is entitled to reduce their taxable gains by this amount once per calendar year.

The value or cost at acquisition of the shares is known as the ‘base cost’. For Glanbia shareholdings this will be the cost of acquiring these shares or the value of the shares on acquiring the shares. For most of our older clients their cost of acquiring the shares will be minimal, most of the shares will have been received from spinouts from their co-op shareholdings and most of the co-op shareholdings will have been acquired at their nominal value of €1.27 per share and even this cost will have been diluted by later spinouts and bonus issues.

For these clients who are wondering how much tax they will have to pay if they sell some of their shares they can estimate their liability by taking their sales proceeds after costs, deducting the annual exemption and applying the 33% tax rate. This estimate will be very close to the actual liability.

Inherited shares

Many of our younger clients will have received some of their Glanbia shareholdings from recent spinouts and some from inheritances or gifts from their parents. These clients will have less CGT to pay than our older clients.

Take for example someone who inherited Glanbia shares this time last year when they were trading at €12.30 a share. If we take the same figures used above, instead of having a base cost of just €10 they will have a base cost of €12,300. Their CGT on selling the shares today for €24,000 will be €3,409 instead of the €7,465 likely to be paid by our older clients.