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.

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How will I know if I have to pay Inheritance Tax?

In this regard a distinction is made between surviving spouses, surviving civil partners and other beneficiaries.

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Surviving Spouse or Surviving Civil Partner

If you are a surviving spouse or surviving civil partner taking an inheritance from your deceased spouse or deceased civil partner, the inheritance is completely exempt and, no matter how valuable, will not be liable to Inheritance Tax.

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Other Beneficiaries

In the case of other beneficiaries, whether or not Inheritance Tax may be payable on your inheritance depends on 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 5th December 1991 up to (and including) the date of the inheritance. Where the aggregable benefit exceeds a tax-free element called the threshold, or "tax-free amount", inheritance tax will be payable.

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What rates of Tax Apply?

The following rates of Inheritance Tax apply:

Rates of Inheritance Tax apply
Up to the "tax-free" amount Nil
Remainder 33%

Historic CAT Rates

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Are there any reliefs / exemptions?

In addition to the exemption for a surviving spouse or surviving civil partner, 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.

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What assets are liable to Irish Inheritance Tax?

An asset will be liable to Irish inheritance tax :

  1. if the asset is located in Ireland, or
  2. if the asset is located abroad, and the deceased or beneficiary is resident or ordinarily resident in Ireland.

Further information in relation to Inheritance Tax (Capital Acquisitions Tax).

April 2013

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