What is inheritance tax? - a concise summary

"In this world, nothing can be said to be certain, except death and taxes" Benjamin Franklin

Wise words indeed from the renowned US statesman, inventor, and one of the United States' founding fathers!

Inheritance tax, also known as Capital Acquisitions Tax (CAT), is a tax imposed on assets inherited by an individual.

Calculating inheritance tax can be complex. The liability depends on the value of the inheritance and the relationship between the deceased and the beneficiary. Currently, the standard rate for inheritance tax is 33%.

Gifts and inheritances between spouses or civil partners are exempt from Capital Acquisitions Tax (CAT).

CAT is applied only to inheritances exceeding certain tax-free thresholds, determined by the beneficiary's relationship to the deceased. These tax-free thresholds are as follows:

Group A: €400,000

This threshold applies to beneficiaries who are:

- A child (including adopted, step, or foster children in certain circumstances) of the deceased

- A parent inheriting an absolute interest in an inheritance upon the death of their child

- A minor grandchild of the deceased, if the deceased's child is also deceased

Group B: €40,000

This threshold applies to beneficiaries who are:

- Siblings, nieces, and nephews of the deceased

- Lineal descendants, such as a grandchild of the deceased (other than those mentioned in Group A)

Group C: €20,000

This threshold applies to beneficiaries who do not fall into Groups A or B.

Have a great day!