Catherine Ardagh (Dublin South Central, Fianna Fail)
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84. To ask the Minister for Finance if he plans to increase inheritance tax thresholds; and if he will make a statement on the matter. [16059/25]

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.

Gifts and inheritances between spouses and civil partners are exempt from CAT. There are also a number of exemptions and reliefs from CAT that may apply depending on the circumstances of the case, including reliefs which apply to relationships within the Group A threshold.

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