The recent Finance Act has introduced significant changes to Capital Acquisitions Tax (CAT), also known as Inheritance or Gift Tax, in Ireland. One of the most notable adjustments is the increase in the tax-free thresholds, which determine how much a person can inherit or receive as a gift before incurring the CAT rate of 33%.
The amount exempt from CAT depends on the recipient’s relationship to the giver, categorized into three groups, each with its own tax-free limits. The new thresholds apply to gifts made or inheritances occurring on or after October 2, 2024. Here’s a breakdown of the updated limits for each group:
- Group A Threshold
Applicable to gifts or inheritances from parents to children (including adopted, foster, and stepchildren).
- New Threshold: Increased from €335,000 to €400,000.
This means a child can receive up to €400,000 from a parent without incurring CAT.
- Group B Threshold
Applicable to gifts or inheritances from blood relatives, such as grandparents, aunts/uncles, or siblings.
- New Threshold: Increased from €32,500 to €40,000.
- Group C Threshold
Applicable to any relationship not classified under Group A or Group B.
- New Threshold: Increased from €16,250 to €20,000.
Any gift or inheritance exceeding the relevant group threshold will incur CAT at the unchanged rate of 33%.
This adjustment to the tax-free thresholds is a long-awaited and welcomed change, particularly in light of rising property prices across Ireland. It provides greater relief for beneficiaries as they navigate the financial implications of inheriting property or receiving gifts.
Stay informed and consider how these changes may impact your financial planning regarding inheritances or gifts!
Adrian Godwin is a Senior Financial Consultant and the co-founder and managing director of Oaktree Financial Services. With a background in accounting and tax advising, Adrian specialises in estate planning and wealth management.Adrian offers clients reassurance through best practice solutions. His unique skill set and qualifications enable clients to develop comprehensive life plans that align with their goals.
