Mattie McGrath (Tipperary South, Independent)
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57. To ask the Minister for Finance the steps he is taking to review the discriminatory aspects of the current inheritance tax legislation particularly with regard to childless adults; and if he will make a statement on the matter. [15088/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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Capital Acquisitions Tax (CAT) is a tax which applies to both gifts and inheritances. 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.

While the thresholds were reduced during the economic downturn, the Government has made changes to the CAT thresholds in recent years. In Budget 2025, the Group A threshold was increased from €335,000 to €400,000, Group B from €32,500 to €40,000 and Group C from €16,250 to €20,000.

It is worth noting that there is an exemption from CAT where dwelling houses are bequeathed to individuals who:

> have lived there for a specified period of time before the inheritance, > will continue to live there for a specified period of time after the inheritance, and > who have no beneficial interest in any other residential property at the date of the inheritance.

The policy rationale behind the dwelling house exemption is to protect the family home by ensuring that a beneficiary who has been living with the disponer, and will continue to reside there after the inheritance, does not have to sell that family home to pay a CAT liability and thus will continue to have somewhere to live. It is not necessary for the beneficiary of an inheritance under the dwelling house exemption to be a child or relative of the disponer.

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.

My officials are reviewing Capital Acquisition Taxes as part of the annual Tax Strategy Group papers. These papers outline the tax policy considerations for the Government and the options available to it in forming this year’s Budget. The papers are published in advance of the Budget and are the best way to consider inheritance tax in an analytical and transparent way.

The Deputy should be aware that there would be a significant cost in making substantial changes to the CAT thresholds. The options available for setting CAT thresholds must be balanced against competing demands, and as part of the annual Budget and Finance Bill process.