Financial planning is an on-going process to help you make good informed financial decisions based on your current and future needs and wants with the resources available to you.  Put simply, “How much do I need to live the life I want”

A Financial plan is a screenshot of your current assets, liabilities, incomes and expenditures.  It estimates the cost of your hopes and dreams in monetary terms and creates a summary approach on how to achieve them

CAT is a tax you pay when you receive a gift or an inheritance. CAT comprises two separate taxes – a Gift Tax payable on lifetime gifts and an Inheritance Tax payable on inheritances received on death. It is the person receiving the gift or inheritance who is liable to CAT and not the person or estate providing the benefit.

How is it charged?

With effect from 1st December 1999, a charge to CAT will arise where either the disponer (the person giving the asset) or the beneficiary (the person receiving the asset) is resident or ordinarily resident in the State at the date of the Gift or Inheritance. Where both the disponer and the beneficiary are not resident or ordinarily resident in Ireland, a charge to tax would only arise in relation to Irish property.

What is the tax rate?

33% is the current rate of tax on gifts or inheritances received by a beneficiary. Source CAT Consolidation Act 2003 (as updated by subsequent Finance Acts).

Can you get any amount tax free?

The amount a beneficiary can receive tax free depends on their relationship to the ‘disponer’.

Group Thresholds

The threshold amounts are those applying with effect from 9th October 2019.

Source CAT Consolidation Act 2003 (as updated by subsequent Finance Acts).

Is that tax-free amount per gift and per inheritance?

No. The tax-free threshold amount is the total amount you can receive tax free in your lifetime, from each different ‘group’. Under the current rules (called aggregation rules) all benefits from Group 1 will be added together with an overall threshold of €335,000. Benefits from Group 2 members (brother, sister, grandparent etc) will be added together for the purpose of the €32,500 threshold, and benefits from Group 3 members (strangers) for the purpose of the €16,250 threshold. So in effect a beneficiary can potentially receive up to €383,750 tax-free if the benefits come through different “groups”.

Is tax payable on everything you receive as a gift or inheritance?

While tax is payable on all assets you receive certain reliefs and exemptions apply to certain types of assets. The main reliefs are:

Agricultural Relief – the value of farmland, buildings and stock can be reduced by 90% where the beneficiary is a qualifying farmer and holds the property for a minimum of 6 years.

Business Relief – can provide a similar reduction of 90% in the value of certain businesses or private companies, where both the business and the beneficiary meet certain conditions.

Family Home Exemption – exemption from Gift and Inheritance Tax is available on the value of certain “dwellings” with up to an acre of land where the disponer and the beneficiary meet certain conditions.

Section 72 Life Assurance Relief – the proceeds of life assurance plans, where the plan was effected specifically for the payment of Inheritance Tax or the tax payable on the value of an Approved Retirement Fund (ARF) inherited by a child over the age of 21, will not be subject to Inheritance Tax – provided the money is actually used to pay the relevant tax bills.

What’s the Issue?

Did you know that assets passing on death between married couples or civil partners are exempt from Inheritance Tax?
BUT this exemption only applies in the case of “legal spouses” and same sex registered civil partners.
All other couples including co-habiting couples are treated as strangers and subject to inheritance tax at
33% for Inheritance Tax purposes.

Aren’t there Thresholds?

On the death of a non-married partner, Inheritance Tax will be payable on the total value of all assets,
regardless of how long the couple have lived together. Where a ‘co-habiting partner’ inherits assets, the
Group 3 threshold of just €16,250 applies and could easily be exceeded.
So, what does this mean