Inheritance Tax Thresholds

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 2013 are:

Group	Relationship to Disponer	Group Threshold from 05/12/2012
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.	€225,000
B	Brother/Sister/Niece/Nephew/Aunt/Uncle/Grandchild/Grandparent and child of a Civil Partner of a Brother or Sister.	€30,150
C	Relationship other than Group A or B. Distant relatives/Non-relatives. Cohabiting partners	€15,075

 

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	33% on gifts/inheritance received on/after 06/12/2012
	30% on gifts/inheritance received between 07/12/2011 to 05/12/2012
	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

 

Example No 1

Jim O Brien received a gift from his aunt Sarah Walsh under her Will in the amount of €40,000. Sarah Walsh died on the 4^th March 2011

What tax is due to be paid by Jim O’Brien?

The correct group threshold that applies here is Group B threshold amount €33,208. Provided that Jim has received no other gifts from his aunt or in any other Will from Group B the calculation of Jim's tax is as follows

Inheritance	€40,000
Threshold	€33,208
Taxable Value	€6,792
Tax Payable @ 25%	€1,698

 

Example No 2.

Mary O'Sullivan received a gift from her friend Sarah Jones under her will in the amount of €50,000 Sarah Jones died on the 18^th February 2009.

What tax is due to be paid by Sarah Jones?

The correct group threshold that applies here is Group C threshold amount €27,127. Provided that Mary has received no other gifts from Mary or in any other Will from Group C the calculation of Mary's tax is as follows

Inheritance	€50,000
Threshold	€27,127
Taxable Value	€22,873
Tax Payable @ 22%	€5,032.06

 

Tax Thresholds for Previous Years

The tax thresholds for the last 10 years, for each group are in the table below.

YEAR	Group A	Group B	Group C
On or after 06/12/2012	€225,000	€30,150	€15,075
07/12/2011 - 05/12/2012	€250,000	€33,500	€16,750
01/01/2011 - 06/12/2011	€332,084	€33,208	€16,604
08/12/2010 - 31/12/2010	€332,084	€33,208	€16,604
01/01/2010 - 07/12/2010	€414,799	€41,481	€20,740
08/04/2009 - 31/12/2009	€434,000	€43,400	€21,700
01/01/2009 - 07/04/2009	€542,544	€54,254	€27,127
2008	€521,208	€52,121	€26,060
2007	€496,824	€49,682	€24,841
2006	€478,155	€47,815	€23,908
2005	€466,725	€46,673	€23,336
2004	€456,438	€45,644	€22,822
2003	€441,198	€44,120	€22,060
2002	€422,148	€42,215	€21,108
2001	€402,253	€40,225	€20,113
2000	€380,921	€38,092	€19,046

 

 

The examples above are for illustration purposes only and are simplified for these purposes. Under no circumstances should these figures be relied upon.

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