How to calculate the value of Annuities or other periodic payments
A benefit which consists of the payment of an annuity which is not charged on property is another example of a benefit which must be capitalised to arrive at the figure to be included in the Inheritance/Gift Tax Return.
The capitalised value of the annuity is deemed to consist of such sum as would yield an annual income equivalent to the annual value of the annuity, were that sum to be invested at the date of inheritance in certain Government Stock. The relevant Government Stock is that stock which was last issued before the date of the benefit and which is redeemable not less than 10 years after the date of issue.
A list of all stocks may be obtained from the National Treasury Management Agency 
The appropriate stock applicable to the benefit should then be selected . The price of the relevant stock at the valuation date can be obtained from the Irish Stock Exchange or the national newspapers.
Example
Under a deed of covenant, David Murphy provided for a payment of €3,600 per annum to his sister Aileen for seven years. The annuity was not charged on any property.
The market value of this annuity is calculated as follows:
Annuity €3,600
Yield of relevant Government Stock, say 14.5%
Price per stock unit on valuation date, say € 0.84
Formula
Annuity / Stock Yield X Price per stock unit
Step 1
€3,600 / 14.5 X 100 = €24,828 of Government Stock
Step 2
To purchase €24,828 of stock at €0.84 per unit would cost €24,828 X 0.84 = €20,855.52
Capitalised Value of Annuity = €20,855.52.
Note that when calculating the taxable value of the benefit, Aileen only has it for seven years.
Taxable Value €20,855.52 X 0.3770 (period certain factor for 7 years) = €7,862.53
The value of the cessor of the rights (if relevant) i.e. capitalised annuity would be calculated in the same way, using the percentage yield of the latest issue of Government Stock and the quoted price of that stock at the date of cessation.