Pádraig O'Sullivan (Cork North Central, Fianna Fail)
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371.To ask the Minister for Finance if consideration will be given to expanding the inheritance threshold in budget 2025 (details supplied); and if he will make a statement on the matter. [32443/24]

Jack Chambers (Dublin West, Fianna Fail)
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Capital Acquisitions Tax (CAT) is a beneficiary-orientated tax that is payable by the recipient of a gift or inheritance as opposed to the person providing that gift or inheritance.

For CAT purposes, the relationship between the person giving a gift or inheritance (i.e. the disponer) and the person who receives it (i.e. the beneficiary) determines the maximum amount, known as the “Group threshold”, below which CAT does not arise.

The Group A threshold (currently €335,000) applies, inter alia, where the beneficiary is a child (including adopted child, stepchild and certain foster children) of the disponer. The Group B threshold (currently €32,500) applies where the beneficiary is a brother, sister, nephew, niece or lineal ancestor or lineal descendant such as a grandchild of the disponer. The Group C threshold (currently €16,250) applies in all other cases.

Any prior gift or inheritance received by a beneficiary since 5 December 1991 from within the same Group threshold is aggregated for the purposes of determining whether any tax is payable on a benefit. Where a person receives gifts or inheritances that are in excess of the relevant tax-free threshold, CAT at a rate of 33% applies on the excess benefit.

Gifts and inheritances between spouses and civil partners are exempt from CAT.

In relation to the details supplied, it is important to note that while the Group A threshold applies mainly where children receive gifts and inheritances from their parents, the Group B threshold (currently €32,500) applies where the beneficiary is a sibling, niece, nephew, lineal ancestor or lineal descendant of the disponer. Thus, the reference to a person being taxed at 33% on a gift or inheritance received from a family member where the value exceeds €16,000 is not accurate. The Group C threshold (currently €16,250) applies to gifts and inheritances received by persons who are of a more remote relationship to the disponer than Group A and Group B or who are not related to the disponer in any way.

Accordingly, where a single person makes a gift or inheritance to a family member, who is not their spouse, child or civil partner, the recipient of that gift or inheritance will be able to avail of either the Group B or Group C threshold depending on the nature of their relationship with the disponer. Furthermore, there are a number of exemptions and reliefs from CAT that may apply depending on the circumstances of the case, many of which do not require that any specific family relationship applies.

One such exemption is the CAT dwelling house exemption. Where a person takes an inheritance of a dwelling house, that person may be able to avail of the dwelling house exemption. To qualify for the exemption, the inherited property must have been the disponer’s principal private residence at the date of death. This requirement is relaxed in situations where the deceased person left the property before the date of death due to ill health; for example, to live in a nursing home. The beneficiary must also have lived in the house for 3 years prior to the date of the inheritance and must continue to live in the house for 6 years after that date. In addition, the beneficiary must not have a beneficial interest in any other residential property. Detailed guidance on the dwelling house exemption has been published on the Revenue website at www.revenue.ie/en/tax-professionals/tdm/capital-acquisitions-tax/cat-part24.pdf.

There is also provision in CAT legislation for a niece or nephew of the disponer to avail of the Group A threshold where the gift or inheritance consists of business assets and certain conditions are met. The niece or nephew must have worked substantially on a full-time basis for a period of five years prior to the gift or inheritance being given in carrying on, or assisting in the carrying on, the trade, business or profession, of the disponer.

Further information on this relief has been published on the Revenue website at: www.revenue.ie/en/gains-gifts-and-inheritance/cat-reliefs/favourite-nephew-or-niece-relief/index.aspx