Beneficiaries
- If you are a Beneficiary - What you should do and when
- What is Inheritance Tax?
- How will I know if I have to pay Inheritance Tax?
- Surviving Spouse
- Other Beneficiaries
- What rates of Tax Apply?
- When do I have to pay the tax?
- How do I pay the tax?
- Are there any reliefs / exemptions?
- What assets are liable to Irish Inheritance Tax?
If you are a Beneficiary - What you should do and when
In summary this is what you should do about Inheritance Tax - and when you should do it.
| What you should do | When |
|---|---|
| Pay any Inheritance Tax due on the benefits received from the deceased |
Within 4 months of the Valuation Date |
What is Inheritance Tax?
Inheritance Tax is a tax which can arise where a beneficiary receives an inheritance as a result of someone dying. The beneficiary is responsible for paying the tax. An inheritance can be taken under a will or intestacy - or in some other way such as, for example, where an asset in the joint names of the deceased and another person is taken, on the death of the deceased, by that other person as survivor.
How will I know if I have to pay Inheritance Tax?
In this regard a distinction is made between surviving spouses and other beneficiaries.
Surviving Spouse
If you are a surviving spouse taking an inheritance from your deceased spouse, the inheritance is completely exempt and, no matter how valuable, will not be liable to Inheritance Tax.
Other Beneficiaries
In the case of other beneficiaries, whether or not Inheritance Tax may be payable on your inheritance depends on whether:
- the total value of all gifts and inheritances
- received by you - the beneficiary
- from the deceased and from anybody else to whom the same group threshold applies
- in the period from 2nd December 1988 up to (and including) the date of the inheritance
exceeds a tax-free element called the "tax-free amount".
What rates of Tax Apply?
The following rates of Inheritance Tax apply:
| Up to the "tax-free" amount | Nil |
|---|---|
| Remainder | 25% |
When do I have to pay the tax?
You have to pay the tax within 4 months of a date known as the Valuation Date. The Valuation Date is the date at which the assets are valued for Inheritance Tax purposes. The Valuation Date for assets passing under the will or intestacy is usually the date on which the Grant of Representation issues from the Probate Office or District Probate Registry. If assets are passing outside of the will or intestacy, the Valuation Date will normally be the deceased's date of death.
How do I pay the tax?
You should complete an Inheritance Tax Self-Assessment Return and send it with the tax to your Capital Tax Office. In straightforward cases, a short version of the return can be used. You should be aware that you will be charged interest from the valuation date if you are late paying the tax.
Are there any reliefs / exemptions?
In addition to the exemption for a surviving spouse, there are a number of other important exemptions and reliefs available, including reliefs for agricultural and business property and exemption for certain dwelling-houses. Where agricultural or business relief applies, the market value of the property for Inheritance Tax purposes is substantially reduced by 90%. Where the dwelling-house exemption applies, the market value of the dwelling-house is completely exempt.
What assets are liable to Irish Inheritance Tax?
An asset will be liable to Irish inheritance tax :
- if the asset is located in Ireland, or
- if the asset is located abroad, and the deceased or beneficiary is resident or ordinarily resident in Ireland.