Gift/inheritance tax

If you receive a gift or an inheritance, you may have to pay tax on it. The tax payable on both is called Capital Acquisitions Tax. The current CAT rate is 30%.

The benefit is taxable if it is above certain thresholds. These thresholds are the amount you are able to receive over a lifetime from a certain category of person, based on their relationship to you. Whether or not CAT may be payable on your inheritance depends on whether the total value of all gifts and inheritances received by you from that person and from anybody else to whom the same group threshold applies in the period from 5th December 1991 up to (and including) the date of the gift/inheritance exceeds a tax-free threshold called the “tax-free amount”.

Group A applies where

• the beneficiary, the person receiving the benefit, is a child of the person giving it.
• parents take an inheritance from their child but only where the parent takes full and complete ownership of the inheritance. Otherwise Group B applies.
• If a parent inherits from their child, and have full and complete ownership of the inheritance it is exempt from tax if, in the previous five years, the child took an inheritance or gift from either parent and it was not exempt from CAT.

Group B applies where the beneficiary is the:

• Parent – see also Group A above
• Grandparent
• Grandchild or great-grandchild
• Brother or sister
• Nephew or niece of the giver

Group C applies to any relationship not included in Group A or Group B.

Reliefs

There are a number of important exemptions and reliefs available, including the exemption for a surviving spouse, reliefs for agricultural and business property and exemption for certain dwelling-houses.

Due dates for payment

• Where the valuation date arises between 1 January and 31 August, the Pay & File deadline would be 31 October that year.
• Where the valuation date arises between 1 September and 31 December, the Pay & File deadline is 31 October in the following year.