Effective inheritance tax planning can help you pass on more of your assets in a tax-efficient way. A little structure now can reduce future tax pressure for the people you want to support.
Tax overview
Gifts and inheritances in Ireland may be subject to Capital Acquisitions Tax. The amount that can pass tax-free depends on the relationship between the giver and the recipient.
If a gift or inheritance exceeds the relevant threshold, CAT is charged at 33% on the excess. Knowing the limits early gives you more room to plan.
Current thresholds
Children and certain other descendants.
EUR 335,000
Siblings, nieces, nephews and certain other relatives.
EUR 32,500
All other relationships.
EUR 16,250
Planning option
Section 73 of the Capital Acquisitions Taxes Consolidation Act 2003 allows a life assurance savings policy to be used to cover future gift tax liabilities without creating an extra tax charge for the recipient.
It can be a practical way to prepare for a future tax bill so a gift or inheritance can pass more efficiently.
Policy length
It should run for at least 8 years.
Premium pattern
Premiums need to be paid regularly, without a break of more than one year.
Use of proceeds
The proceeds must be used to pay the gift tax within one year of withdrawal.
Next step
A clear inheritance strategy can help preserve more of your estate and reduce stress for your family later on.
