LAST UPDATE | 1 Oct 2024

THE THRESHOLD FOR when inheritance tax must be paid has been increased from €335,000 to €400,000 for children.

Minister for Finance Jack Chambers made the announcement in this afternoon’s Budget speech, saying he believed it was “appropriate” to make the first increase in the rate since 2019 given the increase in property values since then.

Inheritance tax, which is technically known as the Capital Acquisitions Tax (CAT), is a tax of 33% on gifts and inheritances which kicks in at a particular limit.

It does not have to be paid if the inheritance does not reach this limit.

Inheritance from a parent to a child (including adopted or stepchildren) is counted as a “Group A” inheritance.

Within this group, the inheritance tax limit has been increased from €335,000 to €400,000.

Close to 97% of people will be unaffected by this tax change. 

The second category limits have also been increased from €32,500 to €40,000.

This category includes siblings and nieces or nephews.

Within the third category, which is any relationship not covered by the first two categories, the threshold has been increased from €16,250 to €20,000.

Former Justice Minister Alan Shatter has launched a campaign to abolish inheritance tax.

Speaking today, Shatter said “it is a major failure of government that the budget has not abolished our outdated Inheritance Tax law”.

He described the tax as “State sponsored grave robbery” and gave only a “limited welcome” to the threshold increase announced today.

Shatter said the threshold limit should have been increased to €666,000 “as a minimum”.

Shatter added that the thresholds for siblings and nieces or nephews, and payments to people within the third category are “far too low”.

“As for children who inherit from a deceased parent, the welcome exemption limit increase from €335,000 to €400,000 remains €142,544 below the exemption limit of 2008 and years earlier,” said Shatter.

In contrast, Trade union SIPTU described the Budget as “fiscally irresponsible”, arguing that any cut on inheritance tax ”makes a mockery of equality” as over 100,000 children live in poverty.

“Today’s measures will hollow out our tax base at a time of slowing growth. Tax cuts today will mean larger tax increases in the future as growth slows to 1% per capita in the years ahead.”

Similarly, Social Justice Ireland said that while one-off measures and double payments are welcome, they are no solution to the challenge of poverty and low incomes.

“Indeed, when the one-off measures are stripped out, households on fixed incomes have been left behind again and income gaps will widen further,” the group said.