Inheritance Tax

Inheritance Tax

Capital Acquisition Tax (‘CAT’) is the official name for Gift or Inheritance Tax. It applies to all property and assets that are passed on to beneficiaries.

We advise on all aspects of gifts and inheritances tax. Understanding inheritance tax in Ireland can be complex, especially when dealing with various aspects like capital acquisition tax, thresholds, and potential exemptions.

How Much is Inheritance Tax in Ireland?

Currently the standard rate for inheritance tax in Ireland is 33%

However, the amount of inheritance tax in Ireland depends on several factors, including the value of the inherited property and the relationship between the benefactor (person providing the inheritance) and the beneficiary (person receiving the inheritance) and valuation dates.

Inheritance Tax Rates and Thresholds in Ireland

Inheritance tax rates in Ireland are determined by the relationship between the benefactor (the giver) and the beneficiary (the receiver).

There are different threshold levels beyond which the tax applies. It applies to all property and assets that are passed on to beneficiaries

Tax-Free Thresholds

Group A: €335,000

This threshold applies to beneficiaries who are:

  • A child, including adopted, step-, or foster children (in certain circumstances), of the benefactor or the benefactor’s civil partner/spouse
  • A parent inheriting an absolute interest of an inheritance on the death of your child
  • A minor grandchild of the deceased benefactor if their child (your parent) is also deceased

    Group B: €32,500

    This threshold applies to beneficiaries who are:

    • A parent of the benefactor, where you receive a limited interest or a gift
    • Siblings, nieces and nephews of the benefactor
    • Children of a brother or sister of the benefactor

    A lineal ancestor, such as a grandchild of the benefactor

    Group C: €16,250

    This threshold applies to beneficiaries who have a relationship to the benefactor on the date of the gift or inheritance that is not covered by the above groups.

    Some Reliefs and Exemptions:

    • Gifts or inheritances from a spouse or civil partner are exempt.
    • Business Relief
    • Agricultural Relief
    • Gift or inheritance of a house that has been your main residence (Dwelling house exemption).
    • Small gift exemption of €3,000 per year

      Dwelling house exemption

      If you inherit a house and qualify under the dwelling house exemption, you will not be liable for Capital Acquisitions Tax (CAT).

      The rules surrounding this exemption are:

      • The home must be the main residence of the person who has died.
      • The individual inheriting the home must have lived there for three years before the homeowner’s death.
      • The individual inheriting the home must remain living in the home for six years after it is inherited.
      • The individual inheriting the home must not have an interest in any other property. This also includes any other properties that may be part of the same inheritance.

      However, the above stipulations do not apply if:

      • You are over age 65 at the time of inheritance, or
      • Are required because of employment to live elsewhere, or
      • You are required to live elsewhere because of your physical or mental state as certified by a doctor.

      Business Relief

      A business is regarded as any activity, trade, or profession which generates income or profits over time. If you inherit a business, you may qualify for business relief. This relief may enable the value of the qualifying business to be reduced by 90% when passed to a beneficiary.

      The beneficiary must retain the business for a minimum period of six years and must ensure certain stipulations are met. If not met, there may be a clawback.

      If you find yourself in this situation it would be advisable to consult the help of an expert with experience in these situations.

      Agricultural Relief

      This is similar to business relief where the value of an agricultural property can be reduced by 90% when passed to a ‘farmer’. 

      To qualify for agricultural relief as a farmer, the value of your agricultural property must:

      • Consist of at least 80% of your total property value on the valuation date.  This is referred to as a ‘farmer test’.

      Revenue provides an in-depth analysis of the rules surrounding agricultural relief and the exemptions attached.

      Favourite Niece/Nephew

      In some cases, a niece or nephew of the deceased may be treated as a child and therefore fall under the €335,000 threshold. There are various conditions that must be met to be eligible for this relief.

      When do you pay and file Inheritance Tax?

      If the valuation date falls between:

      • 1 January and 31 August, you must pay by 31 October of that year
      • 1 September and 31 December, you must pay by 31 October of the following year.

      No Refund, No Fee - Straightforward as that!

      PAYE individuals in receipt of PAYE income only, can avail of our ‘No Refund -No Fee’ policy. If you are due a tax refund our fee will be 10% plus VAT of any tax refund due to you and remember, there is no upfront payment or minimum charges – our fee is only due when you receive your tax refund.