Written answers
Thursday, 8 May 2025
Department of Finance
Tax Data
Michael Lowry (Tipperary North, Independent)
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283. To ask the Minister for Finance given the ongoing concerns about discrimination in inheritance tax policy, particularly affecting single and childless citizens, the reason these individuals are subject to less favourable tax-free thresholds compared to other groups; if he will commit to a complete reform of the inheritance tax system, rather than merely tweaking the Group A, B, and C thresholds; if he will reconsider the terminology used for Group C recipients, who are often loved ones and lifelong friends, and ensure that the tax policy reflects their importance in people's lives; and, given the impact on one million single and childless citizens, the measures the Minister will take to ensure that the inheritance tax policy is fair and non-discriminatory; and if he will make a statement on the matter. [22917/25]
Paschal Donohoe (Dublin Central, Fine Gael)
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Capital Acquisitions Tax (CAT) is a beneficiary-based tax on gifts and inheritances that is payable on the value of the property received. 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.
There are three Group thresholds:
- the Group A threshold (currently €400,000) applies where the beneficiary is a child of the person giving the gift or inheritance
- the Group B threshold (currently €40,000) applies where the beneficiary is a brother, sister, nephew, niece, lineal ancestor or lineal descendant of the person giving the gift or inheritance
- the Group C threshold (currently €20,000) applies in all other cases.
In addition, nieces or nephews of that disponer may qualify for favourite niece or favourite nephew relief in respect of gifts or inheritances of business assets. The relief allows a niece or nephew who qualifies for the relief to avail of the Group A threshold. Qualifying nieces or nephews are those who 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.
For the nephew or niece to be deemed to be working substantially on a full-time basis in the business he or she must work:
- more than 24 hours per week at the place where the business, trade or profession is carried on; or
- more than 15 hours per week at the place where the business, trade or profession is carried on exclusively by the disponer, any spouse or civil partner of the disponer and the nephew or niece.
- 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.
Finally, it is important to be aware that changes to CAT bear significant costs and must be considered in the context of available resources and must also be balanced against competing demands.
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