Inheritance Tax in Ireland Is More Complex Than People Expect. We Make It Manageable.

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What Is Inheritance Tax in Ireland?

Inheritance tax in Ireland is called Capital Acquisitions Tax (CAT). It applies when you receive a gift or inheritance above a certain tax-free threshold. The current rate is 33%, applied to the value of what you receive above your threshold not the full value of the inheritance.

The tax-free threshold you get depends on your relationship to the person leaving you the gift or inheritance. Thresholds are lifetime figures, meaning every gift and inheritance you receive from the same group counts toward the same limit.

CAT applies to property located in Ireland, and also to assets located abroad if either the person giving or the person receiving is tax-resident in Ireland.

Inheritance Tax Thresholds in Ireland

• Group A €400,000: Applies where the beneficiary is a child of the disponer (the person giving the benefit). This includes adopted children, stepchildren, and certain foster children. In limited circumstances, it also applies to parents inheriting from a child.
• Group B €40,000: Applies where the beneficiary is a sibling, nephew, niece, grandchild, or other lineal relative of the disponer.
• Group C €20,000: Applies in all other cases cousins, friends, and unrelated beneficiaries.
• Spouses and Civil Partners: Inheritances and gifts between spouses or civil partners are fully exempt from CAT. There is no threshold limit and no tax payable.

If the value you receive exceeds your group threshold, CAT at 33% is charged only on the amount above the threshold not the total inheritance.

Who Needs to File a CAT Return?

You are required to file a CAT return (Form IT38) with Revenue if the value of what you receive exceeds 80% of your relevant group threshold. This applies even if no tax is actually due.

For example, if you are in Group A with a €400,000 threshold, you must file once your cumulative inheritance or gifts from that group exceed €320,000.

Filing deadlines apply, and penalties arise for late returns. We manage this on your behalf to ensure compliance and avoid unnecessary interest or surcharges.

Key Exemptions and Reliefs That Can Reduce Your CAT Bill

1. Small Gift Exemption Every person can receive up to €3,000 per year from any individual completely free of CAT. This exemption does not use up your lifetime threshold, making it a useful planning tool when used consistently over time.
2. Dwelling House Exemption If you inherit a property that was your principal private residence at the time of inheritance, and you have lived there for a minimum period, you may be fully exempt from CAT on that property subject to conditions including that you do not own another dwelling.
3. Agricultural Relief Where the inherited property qualifies as agricultural property and the beneficiary meets the active farmer test, the taxable value of the inheritance can be reduced by up to 90%. This can dramatically reduce the CAT liability on farms and rural land.
4. Business Relief Similar in structure to agricultural relief, business relief reduces the taxable value of qualifying business assets including shares in a private trading company or a sole trader business by up to 90%, where certain conditions are met.
5. Favourite Nephew or Niece Relief A nephew or niece who has worked substantially full-time in the business of the disponer for at least five years immediately before the inheritance may qualify to be treated under Group A thresholds rather than Group B. This can significantly reduce the tax payable.
6. Double Taxation Relief Where inheritance tax has been paid in another jurisdiction such as the UK or USA on the same assets, a credit may be available against your Irish CAT liability, subject to applicable double tax treaties.

Inheritance Tax Planning Act Before, Not After

The most effective way to manage CAT is to plan in advance. Once an estate has transferred, the options narrow considerably. With proper planning, families can reduce their CAT exposure significantly using a combination of:

Annual small gift exemptions used systematically over several years. Trusts and life insurance policies written in trust to fund a future CAT liability. Early restructuring of business or agricultural assets to qualify for relevant reliefs. Pension planning pension funds generally fall outside of the taxable estate for CAT purposes. Deed of family arrangement strategies where estate distributions are reorganised after death within specific timeframes.

Every family’s situation is different. TAS Consulting reviews your specific position and advises on the most appropriate and compliant approach to reducing your tax burden not a generic strategy copied from a checklist.

What Happens If You Don’t File?

Revenue takes CAT compliance seriously. Failing to file a CAT return on time results in surcharges, interest on late payments, and potential Revenue intervention. Where assets particularly property are involved, Revenue cross-references data from probate records, Land Registry filings, and financial institutions.

If you’ve received an inheritance and are unsure of your obligations, the safest step is to get a professional review promptly. We can assess your position and, where a return is required, prepare and file it correctly.

How TAS Consulting Handles Your Inheritance Tax

• Assessment We review the full picture: the nature of the assets inherited, your relationship to the disponer, prior gifts you may have received, and any available reliefs.
• Planning advice Where relevant, we advise on structuring options before any tax becomes due, including the use of exemptions, reliefs, and long-term wealth transfer strategies.
• IT38 preparation and filing We prepare your Capital Acquisitions Tax return accurately, ensuring all reliefs and exemptions are applied, and file it with Revenue within the required deadline.
• Ongoing support We keep you informed of threshold changes, Budget updates, and any actions you should take year on year to reduce your long-term CAT exposure.

Frequently Asked Questions