Inheritance tax: an Irish guide (2024)
The tax on a person’s estate after they’ve died is called inheritance tax (IHT), which is a type of Capital Acquisitions Tax (CAT). In this article, you’ll discover what Irish inheritance tax is, who has to pay it, how it’s calculated, and if there are ways you may be able to reduce the amount you’ll pay in 2024.
Inheritance tax is paid on a person's estate when they pass away
The tax is applicable to all property in Ireland, and the standard rate for 2024 is 33%
Some things, like gifts given or received by a civil partner or spouse, are exempt from inheritance tax
What is inheritance tax?
Inheritance or Capital Acquisitions Tax (CAT) is the tax payable on the estate of someone who has passed away. Estates are made up of various assets, for example, money, property, pensions and possessions. How much tax you’ll need to pay will depend on the entire value of the estate.
You can receive gifts and inheritances up to a set value over your lifetime before having to pay Capital Acquisitions Tax. Once due, it is currently charged at the rate of 33%, on gifts or inheritances made on or after 5 December 2012.
Who has to pay inheritance tax in Ireland?
It falls to the recipient or beneficiary to pay the inheritance tax (IHT), and is applicable to all property in Ireland.
Capital Acquisitions Tax is also payable by the recipient on property located outside of Ireland if the person either giving or receiving the inheritance is resident in Ireland for tax purposes.
When do you have to pay inheritance tax?
Irish Inheritance tax must be paid by the 31st October for any inheritance dated in the year to the 31st of the previous August.
This means that if you inherit a property any time between 1st September and 31st August, you must pay capital acquisitions tax by the 31st October.
For example, if you inherited a property on 3rd September 2023, you will have to pay CAT by 31st October 2024. If you inherited on 30th August 2023, you would have still had to pay CAT by 31st October 2023.
You must complete form IT38 for a gift or inheritance tax return, and you can pay CAT online. Note that you will be charged a percentage of the tax you owe if you pay late, as is the case with late payments on other types of taxes.
How much is Irish inheritance tax in 2024, and how is it calculated?
The standard rate for inheritance tax in Ireland in 2024 is 33%.
However, there are exemptions to paying inheritance tax (more on those below). These exemptions depend on the relationship between the recipient of the inheritance and the person you are inheriting from.
What is a disponer and beneficiary?
A disponer is the person who gives you the gift or inheritance, and the beneficiary is the person who receives the gift or inheritance. A gift become inheritance if the disponer dies within two years of giving the gift.
Inheritance tax thresholds
Firstly, gifts and inheritances given or received by a civil partner or spouse are exempt from CAT. If you are a widow, widower or a surviving civil partner, you may be eligible to additional relief. You also do not need to pay CAT on a gift with a value of €3,000 or less from any one person in any one calendar year.
Tax-free thresholds depend on your relationship with the disponer (the person giving the gift or inheritance).
How much can I inherit tax-free in Ireland?
Tax-free thresholds
Group A | Group B | Group C | |
|---|---|---|---|
Tax-free threshold | €335,000 | €32,500 | €16,250 |
This threshold applies if you, as a beneficiary, are | A child, including adopted, step- and foster (in some circumstances), of the disponer or the disponer’s civil partner; a minor grandchild of the deceased disponer if their child (your parent) is also deceased; a parent inheriting an absolute interest of an inheritance on the death of your child | A parent of the disponer, where you take limited interest or a gift; siblings of the disponer; a child of a brother or sister of the disponer; nieces and nephews of the disponer; a lineal ancestor, such as a grandchild of the disponer | Someone with a relationship to the disponer, on the date of the gift or inheritance, that isn’t covered in the other groups |
New CAT thresholds for 2025
As announced in Budget 2025, the CAT Group thresholds will be increased next year:
- Group A - rising from €335,000 to €400,000
- Group B - rising from €32,500 to €40,000
- Group C - rising from €16,250 to €20,000
Additional inheritance tax exemptions
There are also three instances in which you may be exempt from paying any inheritance tax.
1. If you have inherited a property at some point since 25th December 2016, and you meet all the following criteria:
- You lived in this property, and it was your main residence for three years before your donor’s death;
- The property was the donor’s only home;
- You do not own another house, including another house you may have received in the same inheritance; and
- You reside at this property, and it’s your main home for six years after you receive the inheritance (unless you are aged over 65).
2. If your inheritance comes from your spouse or civil partner.
3. If the deceased is a child who has taken a non-exempt gift or inheritance from a parent within the previous five years, the parent is then exempt from inheritance tax.
How does the 7-year rule work?
You may have heard of the “7-year rule”, and be wondering what it means.
Well, the 7-year rule applies to gifts of assets. If you die within seven years of giving a gift and there’s IHT to pay on it, the amount of tax due after your death depends on when you gave the gift.
Most gifts made more than seven years before death will escape tax. Irish inheritance tax can also be applied to some lifetime gifts, but most are ignored providing the donor survives for seven years after the gift.
What to do after paying inheritance tax?
With careful planning, the tax bill beneficiaries pay on inheritance tax can be reduced. If you have leftover inheritance, you may want to consider saving it in a term deposit, which guarantees you a fixed interest rate.
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