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Inheritance Tax Thresholds (18.01.12)

All you need to know about the new inheritance tax thresholds for 2012

A person is entitled to receive gifts/inheritances up to a certain value without having to pay inheritance tax (also known as Capital Acquisition Tax (CAT)). The amount of tax payable depends on the amount of the gift/inheritance, the relationship between the parties and whether the person received a previous gift from someone in the same threshold group. The amount that can be received tax free is known as the threshold.

The current thresholds for 2012 are:

Group	Relationship to Disponer	Group Threshold from 07/12/2011
A	Son/Daughter/Minor Child of a deceased Child. This group also includes adopted, step-children and long-term foster children (subject to certain conditions being complied with). Certain nieces and nephews also come within this group provided also that certain conditions are complied with. It also includes the child of a Civil Partner/minor child of a deceased child of a Civil Partner.	€332,084
B	Brother/Sister/Niece/Nephew/Aunt/Uncle/Grandchild/Grandparent and child of a Civil Partner of a Brother or Sister.	€33,205
C	Relationship other than Group A or B. Distant relatives/Non-relatives. Cohabiting partners	€16,604

It is important to note that no inheritance tax is payable if you receive a gift/inheritance from your spouse. The Finance (No. 3) Act 2011 provides an exemption from inheritance tax between Civil Partners.

If the inheritance or gift is received on or after 5 December 2001, then all inheritances and gifts received within the threshold group since 5 December 1991 are aggregated.

The following two examples show how aggregation applies:

If you received a gift from a aunt in 1996 and then inherited from a uncle in 2011, the two amounts are added together as they belong to the same group. If they are greater than the current threshold figure, you are liable for inheritance tax.
If you receive a gift for your mother in 1995 and then inherit a gift from your aunt in 2010, the two amounts are not added together as they belong to different groups. The gift received from your mother is Group A and the gift received from your aunt in Group B.

Gifts/Inheritances received by a beneficiary above the threshold amount are subject to inheritance tax.

The rate of tax payable by a beneficiary is:

Gift/Inheritance	Rate of Tax
Up to Threshold amount	Nil
Amount received above Threshold amount	30% on gifts/inheritance received on/after 07/12/2011
	25% on gifts/inheritance received between 08/04/2009 to 06/12/2011
	22% on gifts/inheritance received between 20/11/2008 to 07/04/2009
	20% on gifts/inheritance received prior to 19/11/08

By Caroline Browne, Solicitor

Disclaimer: the information herein is intended as a general guide only. No responsibility is accepted for errors or omissions howsoever arising. Specialist legal advice from a solicitor should be sought before taking any action in response to the issues raised in this article

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