Inheritance Tax – What is it?
It is a tax that is paid when you receive an inheritance as a result of a death. (Receiving something for nothing).
Who Pays the tax?
The Beneficiary - the person who receives the inheritance.
What is taxable?
Practically all assets - cash, land, investments, etc.
How much can you receive?
Depends on relationship and if any previous gifts/inheritances received*
There are three tax-free thresholds, which apply for Inheritance Tax purposes:
| Group 1 |
€434,000 where the recipient is a child, or a minor grandchild of the benefactor, if the parent is dead. In some cases this threshold can also apply to a parent, niece or nephew who have worked in a family business for a period of time. |
| Group 2 |
€43,400 where the recipient is a brother, sister, niece, nephew, or linear ancestor/descendent of the benefactor or where teh gift is made by the child to the parent. |
| Group 3 |
€21,700 in all other cases. This is known as the Stranger Threshold. Thresholds are normally inflation linked but were in fact reduced following the mini budget. |
Rates of Inheritance Tax?
Up to threshold amount Nil
Balance 25%
S72 Life Policies
Life assurance policies taken out to pay the Inheritance Tax due on your death* are also exempt from inheritance tax, provided that the proceeds are used to pay the tax due. If the policy provides more money than is needed to pay the inheritance tax due, the excess will be taxable. The S72 policy is written on a Whole of Life Unit Linked Protection plan. If it is a joint life case, the case must be structured on a Joint Life Second Death basis.
When is the tax payable?
The Inheritance Tax must normally be paid in one lump sum, within 4 months of the date the inheritance is received by beneficiary and within 1 year of the date of death.
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