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THERE’S BEEN A massive jump in inheritance tax takings, and nieces and nephews are getting the brunt of it.
New figures provided by Fianna Fáil’s Michael McGrath show that the yield from Capital Acquisitions Tax, which is applied to gifts and inheritances, has increased by over 65% since 2011.
The amount that a person might have to pay out depends on the relationship between the person inheriting and the deceased.
A spouse or civil partner is required to pay no tax.
For all other beneficiaries, a tax-free threshold amount is afforded, after which Capital Acquisitions Tax has to be paid.
These beneficiaries are split into three different groups.
Providing for family members
Sons and daughters receive the largest tax-free amount. The second group is made up of parents, brothers, sisters, nieces, nephews and grandchildren and the third group includes any other type of relation.
The hike in takings follows reductions in the thresholds in recent years, resulting in a major increase in the number of transactions caught in the tax net.
In 2015 the largest category – which includes nieces and nephews – amounted to 33% of inheritance cases.
Figures show the tax take for this category jumped from €121.7 million in 2010 to €183.2 million in 2015.
Gifts and inheritances in the category known as “strangers in blood” (category three) amounted to 23% of all cases. This jumped from €34.8 million in 2010 to €58.9 million in 2015.
A total of 21% were in respect of a sibling, while only 18% of cases involved a child of the deceased.
Gifts and inheritance for children
The programme for government promises to raise the tax threshold for all gifts and inheritances from parents to their children from €280,000 to €500,000.
Tax take for this group of parents to children more than doubled between the years of 2010 to 2015 from €76.5 million to €156.1 million.
McGrath said it was not enough to just increase the threshold for children of the deceased.
As it stands, Minister Noonan plans to increase the Group A (parent to child) threshold from €280,000 to €500,000 but leave the Group B (other blood relative) and Group C (stranger in blood) thresholds unchanged. These are already at very low levels of €30,150 and €15,075 respectively and were not changed in Budget 2016 when the Group A threshold was raised by nearly 25%.
He said it is every person’s wish to provide financial security for family members and people close to them.
People will naturally want to be able to pass on the benefits of their lifetime’s work to their children, grandchildren and other family members depending on their particular circumstances.
The changes in inheritance promised by government will not impact on those that are most affected by the rates of inheritance tax, said McGrath.
As can be seen from the figures provided to me, the proposal not to change the Group B and Group C thresholds does not reflect the very large number of inheritance tax cases which involve family members other than children and also those involving non family members.
He said it is particularly unfair to people who do not have children, but have relatives they wish to provide for.
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Just to be clear. This is money that was earned by a person, with all necessary taxes paid.
The person passes away and leaves cash to certain relatives. This money is again taxed.
You couldn’t make it up?
… and then if they use it to buy something, they pay more tax.
and then that tax is used to build hospitals, schools and roads.. the circle of life..
You realise that your income is taxed then if you buy something you pay VAT. Are you outraged by that too? The tax is on the beneficiary, not the donor (who’s dead) so it’s not a double tax. It also stops family dynasties where idiots inherit all their relatives wealth and thus power. I Du think the thresholds should be increased however.
The money isn’t taxed, the dead person isn’t taxed.
The windfall gained by a different individual, the beneficiary, is taxed. It’s as if they bought a house for [threshold amount] euro and sold it at a profit 10 years later.
The person who inherits the money has done nothing to earn the money. They haven’t worked for it. It is they who are being taxed, not the deceased person. The entire defence of inequality that people tend to put forward is that some people work harder than others and so deserve to be rich. This clearly isn’t the case because huge swathes of wealth is inherited by people who haven’t worked for it.
Take the case of the new Duke of Westminster who inherited £9bn at the age of 25. He didn’t work for this. Moreover, neither did his father or his father’s father or his father’s father’s father. Their land wealth dates back hundreds of years.
https://www.theguardian.com/uk-news/2016/aug/10/new-duke-of-westminster-hugh-grosvenor-inherit-fortune
What exactly has the state, or if you prefer ‘the people’, done to earn the money? Absolutely nothing, it’s because we wants it, we needs it. They don’t even have the intellect to realise how shamefaced this is.
Malvolio in a normally functioning economy the proceeds would be used to fund the country which in my mind is a lot better than it going to one or a few individuals who have done nothing to earn it.
Exactly Chris. Keep paying taxes. Whether your alive or dead. Bloody country.
The tax liability is legally on the deceased or the deceased’s estate not the beneficiary…
No Drew it’s not
Robbing the dead/ taking from the bereaved. Disgusting
yes, it’s terrible for rich people to be taxed. I think that rich people should pay less tax, and poor people more.
Considering the average family has 2 children, once both parents die – the direct descendents can inherit 1 million euro each, tax free (under the new plans). The nieces and nephews – can inherit 30,000 euro tax free – for doing nothing.
I worked in a legal office and a lady who worked as a cleaner from ballyfermot passed away leaving her house and a few stocks she had bought and believe me revenue try to get the tax even before the house is sold. It is not a tax that only is taken from the rich. We had people who could not afford to pay Revenue the tax as they didnt have the few thousand Revenue wanted before the estate could be settled so you have to apply(beg) them to allow you pay it after the estate is settled!
Caroline, that’s rubbish.
It took years for my grandfather’s estate to be settled, due to various complications, and when we finally got the proceeds we simply paid the revenue the tax and some calculated penalties, due to the estate being settled in November (therefore requiring a payment by end of year) and us closing a sale the following March.
Begged the revenue, pfffft.
If it takes a while to sell property and pay taxes, you just pay a modest penalty. They don’t come banging down your door, you just get your solicitor to discharge the tax on your behalf when the proceeds come in, along with any penalties accrued. If you can’t sell the gaff, drop the price until you do, otherwise the penalties are your own responsibility.
Well we shall find out. We are both tax resident in jurisdictions without CAT given Australia hasn’t had Inheritance tax since the 70′s. If the tax liability lies with the beneficiary you have nothing to worry about, shouldn’t loose a penny.
Fu bu guo san dai…. As we say here.
Its called the redistribution of wealth….a sicialist concept i believe.
Everytime money changes hands it is taxed here, that is why the government was after prostitutes last year because they couldn’t get tax from them?
Utter disgrace that this tax even exists. What happened to FF abolishing it?
The low thresholds and high rates in Ireland are terrible, and Sinn Fein want these taxes raised even higher. Always engage a good accountant to take advantage of any legitimate loopholes and reliefs that might exist. The dwelling home exemption is an excellent one, but is itself being used for very wealthy parents to gift their children multi million euro homes.
Of course they do, their constituency are generational welfare dependents who will never inherit anything themselves or bequest a anything to their children.
Ross it’s sueded just like the promised abolishment of water charges. Lads need to keep their high paying seats you know
What a ridiculous tax. Is this common practice in other EU countries?
You could argue that it discriminates gay people! The very fact that they are much more unlikely to have children of their own means that wealth they create is taxed far more penally.
It would take LGBT to make it about them. Ye had ye re day now.
Such an unjust tax,the person who died or is passing on the inheritance has already paid tax on the money/assets so why get taxed again
Vincent it was a fair argument so it has a place at the table
every other civilised country in the world has this tax – taxes are how teachers, nurses etc get paid.
Not to mention self serving politicians, who manipulate the public service pay & pensions so that they get an inequitable top cut of the tax take.
The government robbing ordinary people here. How did we let these crooks back in again? You can be sure there is a loop hole for them and their families and the rich.
An alternative lot in power wouldn’t be any better. They’d probably just raise taxes for middle class to pay for sociable housing, dole and austerity. Taxes would certainly not come down and those that pay no tax could conceivably pay less than zero tax with a living wage. You couldn’t make it up at this stage.
ordinary people??? under the new arrangements you will be able to give half a million euro to each of your children tax free when you die. How much money do you have?? “Ordinary people” don’t have a few million to give away after they die.
Vincent you sound uneducated and bitter…
David, anyone can win the lottery. Why would they not want to help someone else? Surely if you won millions and left it to a wealthy charity, that charity or religious body would pay no tax at all?
As there is for everything they do?
According to this report , we are one of the, if not THE highest of any major economy in the world for inheritance tax.
The UK and Ireland take the highest proportion of inheritance or estate taxes of any major world economies, according to a new study by UHY, the international accountancy network.
Ireland would typically take 26%, and the UK 25.8% from the estate of an individual passing on an estate worth US$3m* to their heirs, well above the global average of 7.67%.
Scroll down to the end of that article for chart on the whole thing – This is one rotten little country with thieving batsard government waiting to put their hand in your pocket at every opportunity.
http://www.uhy.com/uk-imposes-highest-taxes-on-inheritance-of-all-major-economies/
Your inheritance = government pay rise.
Minister Noonan plans to increase from €280K to €590K but WHEN!!!!!!! It’s not like it’s complicated!!
The FG way… Tax…
Even in death this country f**ks you over
There is a name for that?
Again a double tax take. The person who bequeaths the money pays tax all their lives and that money net tax is taxed again when someone else inherits it. I think if a person is single and wants to leave money to their nearest relatives they should be treated the same as direct family. After all a nephew or niece is THEIR closest relative. Look on the bright side. Inheritance tax is so high in france a lot of people walk away from inheritance as it doesnt pay. Typical EU Policy . Anything goes.
It’s not a double tax.
It’s a tax on the gain by the beneficiary, not a second tax on the deceased.
If I have 10 children I can leave them 2 million quid without there being any tax (they would each get 200k, below the threshold)
If I have 2 children and I leave them 2 million quid they will each have tax bills (they would each get 1m, well above the threshold)
That’s because exemptions are applied to the beneficiary, not me, and because the beneficiaries pay the tax, not me.
Hold up folks. You can’t argue on one hand for the redistribution of wealth from the wealthy, and then in the same breadth expect to transfer wealth within families without any tax.
Inheritance tax is an essential component in redistributing accumulated wealth into society.
Houses should not come into the equation of inheritance tax – there has already been enough taxes paid on it, in the form of stamp duty and property tax, (which will continue to have to be paid, everything else should be fair game though.
Tax them when they are alive, not when they are dead.
Except those with significant wealth use mechanisms like trusts to avoid paying it at all.
A man works all his life pays his taxes as he goes on everything. Every Time he spends. He then wants to leave the sum total of what he worked for to his kids. The state come along and taxes him and his assets again while he is dead in the ground. They ring the sponge out one last time. It’s the most shameful and unjust tax there is.
You can, people argue one rule for them and one rule for the wealthy… But ultimately everyone defines ‘wealthy’ as anyone that makes €1 more than they do.
State doesn’t tax the dead man’s assets, they can be transferred freely within certain limits.
What the state taxes is the gain by the person inheriting property. I’ve paid inheritance tax (and CAT at the same time), so I know. I made the return, against my PPS number, not my dead grandfather. It was (in my opinion) a very fair contribution taken against my windfall for the greater good of society, I don’t fell like I should have been personally exempt because of emotive reasons like “all my grandad wanted to do was leave us some money, the poor old soul”
As for the calls for a special dispensation for family homes, this would disproportionately benefit the wealthy. By all means increase the thresholds, but any ‘family home’ exemption could immediately be abused.
Finally on trusts, they’re not some magic tax-dodging formula.
http://www.revenue.ie/en/personal/circumstances/bereavement/trustees.html
You’d pay big CGT on selling assets from the trust, and income tax on any income from the trust. There might be tax efficiencies in certain situations, particularly where there’s a group of assets, but the second you try to sell assets there’d be big tax impllications. They are used to keep groups of assets intact and earning income for beneficiaries, where it would be difficult or undesirable to sell a portion to pay the inheritence tax. i.e. they prevent the executor from having to flog everything to divide it up and/or pay the tax bill
Accumulated wealth? Who accumulated it in the first place.? So you think its ok for someone to sit on there arses all there lives and reep benefits from people who have worked hard all there lives and want there family looked after? Looney left again!
1 Wealth in family’s that don’t pay tax are most likely to have very little inheritance to be taxed, 2 the majority of people who strive to live a normal life, squeezed with mortgage bills blah blah blah have to fork out inheritance tax and leave sons, daughters, niece’s and nephew’s very short in this over priced island, on the other hand the wealthy who make their riches off everyone else should pay more inheritance than anyone else makes sense if there is more to go around spread it around, and the wealthy are more likely to inherit a businesses that accumulates wealth anyway.
If I am a resident in let’s say Sweden can I inherit my riches from Ireland and pay the inheritance tax in Sweden not that I would just asking.
No.
Ronan you can’t be talking sense and providing a logical opinion around here
@ChocSaltyBalls, looks murky:
http://ec.europa.eu/taxation_customs/taxation/personal_tax/inheritance/index_en.htm
Definitely depends on the countries concerned.
I guess for cash it might be straight-forward, with you paying tax on your windfall in Sweden (per your example), but inheriting a property that’s in Ireland might be more complex should you wish to keep it.
@Ronan, the Irish solicitor acting for the executor or administrator of an estate had to apply for an Irish PPS number for every overseas beneficiary, end if they have no connection to Ireland. The assets can’t be released without paying the CAT. Our friend in the land of Volvos would have no choice about the Irish CAT.
@Ronan, i understand the concept of cgt. I dont agree with your statement. It is double tax take. The bequeather pays tax all his life. The beneficiary inherits that BUT it is minus cgt beyond a certain amount of inheritance calculations . It effectively means the bequeathers pot is made smaller . If I inherit 1 million from my Mum, 800k goes into my pocket and 200k of my Mums money goes into government coffers via me. the tax might be called a different name but its still tax.
yeah, but YOU pay the tax on YOUR 1 million.
The balancing statement from the revenue will be in your name, with your PPS number. You are paying tax once, on your inheritance. It’s a tax on your windfall, it doesn’t matter whether it comes from your mother or the pope, except for the threshold you get tax free.
In fact, this very threshold is an acknowledgement of the special relationship between parent and child, which allows you to inherit (NB: not your mother to bequeath) up to a few hundred thousand euros.
This is also why a subsequent inheritance from your father doesn’t give you a new threshold (if you use it up inheriting from your mother it’s gone) – because the tax is on YOU and your capital windfall, not on the bequeathing party.
Your mother’s pot would not be reduced if she left it to 4 people with their threshold intact. Why is that? because it’s not the act of leaving property that’s being taxed, it’s the acquisition of capital which is being taxed.
Inherit 800k from your Ma?
Only if she doesn’t we’d someone new!
Like me, perhaps.
Introduction please, urgently.
Dick Turpin wore a mask ……
It’s an ongoing “legacy” from pre marriage equality days which means the “tax man” continues to disproportionally benefit from the discrimination which prevented people having their own families recognised in law. The siblings or nieces and nephews who were close to their gay uncles/aunts as their next of kin still have a huge chunk taken by the legacy issues of inequality.
With some specific provisions for businesses, and particularly farms, which allows a ‘favourite nephew’ to enjoy a larger threshold if he’s been shown to be working on his bachelor uncle’s farm, at least part time.
Rekon the marriage referendum will reduce a lot of people’s inheritance tax bill.
Doesn’t matter if your gay straight whatever just marry the person you want to inherit from!! A spouse can inherit unlimited amounts tax free.
I’m aware of one such case with an elderly farmer and an unrelated workman who was with him for decades
@Ronan, you obviously know what you’re talking about, a rare quality around here. You’ve pretty much covered it all, except to mention the Small a Gift Exemption. If a person wishes to reduce the CAT liability of a potential beneficiary who may not have sufficient available threshold, a sum of €3,000 per year can be paid free of CAT, during the donor’s lifetime of course.
An estate can be reduced significantly through proper tax planning, using perfectly legal mechanisms, thus reducing the CAT liability on the donor’s death.
It’s obvious from the comments that many people are against this tax. Great – let’s abolish it. The hundreds of millions raised from this tax should then be removed for the budget for caring for the elderly – let’s see all home help, hospice care, community services, free public transport cut.
This tax money is actually spent on the elderly. The few thousand you will pay in tax if you inherit over half a million euro from your parents would soon be eaten away by caring for them full time at home without any community services before they die.
Most of the money gathered is wasted with NGO and deals with government pals, how much has the government over spent on IW for an example?
Article 43 2°
The State accordingly guarantees to pass no
law attempting to abolish the right of private
ownership or the general right to transfer,
bequeath, and inherit property.
In reality we only have the right to inherit not all but only some of it. The spirit of the law is something that is sorely ignored by many and something that majority seem to not know is a concept at all. Following the letter of the law is often contrary to it’s spirit but regularly used to rob those who know no better.
i don’t see why people should inherit tax-free money. it’s a republic, we should not be favoured because we had a rich daddy. if someone earns 50k they will pay tax – if they inherit it they should also.
In a genuine Republic, which this state claims to be, but manifestly fails to achieve, I would strongly support cgt & cat as legitimate redistributive taxes, in preference to taxes on earnings/living expenses, such as vat/stamp duty on homes, property tax, levies on pensions, public service charges, etc,etc.
If citizens are fortunate to accumulate asset wealth, whether by enterprise or good fortune, it is morally correct that a significant portion should revert to the public purse when they depart this life.
Unfortunately, these taxes are not being applied to the general good, as a huge proportion is going into the pockets of the suited elites, both active & retired.
This month alone, we have had details of the monstrous pensions secured by the top echelons in the Republic, & the appointments of new HSE ” Directors”, at the same time as pay strictures apply to nurses & doctors, & privately funded pensions are failing wholesale, due to poor investment returns, the infamous levies, & state imposed funding levels that are not applied to public pensions.
The Egalite & Fraternite supports for the republican state are regrettably very weak, & badly need re- booting
have your say