When a loved one passes away, dealing with their estate can be an emotional and complex process. One of the key aspects to consider is inheritance tax. In Ireland, this tax is officially known as Capital Acquisitions Tax (CAT). Understanding how inheritance tax in Ireland works, how much you can inherit tax-free, and how to calculate your potential liability can save you both time and money.
In this comprehensive guide, we will explain what inheritance tax is, how it’s calculated, what the inheritance tax thresholds are, and recent inheritance tax changes introduced in Budget 2025.
Inheritance tax is the tax paid on the value of property, money, or assets that you inherit when someone dies. In Ireland, this tax is known as Capital Acquisitions Tax (CAT).
The inheritance tax rate in Ireland for 2025 remains at 33%, which applies to the portion of an inheritance that exceeds the tax-free thresholds.
Capital Acquisitions Tax applies to:
If you inherit any of the above and exceed the inheritance tax threshold, you are liable to pay CAT at 33%.
A gift becomes an inheritance if the disponer dies within two years of giving it.
Unlike some countries where inheritance tax is paid by the estate, inheritance tax in Ireland is paid by the beneficiary.
You may be liable for Irish CAT if:
If you fall into either of these categories, you will need to calculate your tax liability and make the necessary arrangements to pay the tax.
It must be paid by 31st October of the year following the inheritance if the valuation date falls between 1st September of the previous year and 31st August of the current year.
Late payments are subject to interest charges and penalties.
You will need to file Form IT38 to declare the inheritance and pay your tax liability through Revenue’s myAccount or ROS (Revenue Online Service).
The Current Rate: 33%
The inheritance tax rate in Ireland has been set at 33% since 2012, and this remains the standard rate in 2025. However, you are only taxed on the amount above the applicable tax-free threshold.
For example, if you inherit €500,000 from a parent and your applicable inheritance tax threshold is €400,000, you would only pay tax on €100,000. The inheritance tax would be €33,000 (33% of €100,000)*.
The amount you can inherit tax-free depends on your relationship with the deceased. These amounts are called thresholds and they are grouped as follows:
If you receive €100,000 from an uncle:
As of October 2024, inheritance tax thresholds have been increased:
This means more inheritance is tax-free than before, offering some relief to beneficiaries.
Click here to read more about Inheritance Tax Threshold in Ireland: A Key Issues in 2025’s Budget
Certain inheritances are exempt from inheritance tax altogether, including:
1. Spouse or Civil Partner: Gifts or inheritances between spouses or civil partners are fully exempt.
2. Dwelling House Exemption: If you inherit a house under certain conditions, you may qualify for full exemption from CAT. Conditions include:
3. Parental Exemption: If a child dies having previously received a taxable inheritance from a parent within the last 5 years, the parent may be exempt from CAT.
When it comes to Capital Acquisitions Tax (CAT), it’s important to understand that your tax-free thresholds are lifetime limits. This means that any gifts or inheritances you have previously received from the same person (the “disponer”) will reduce the available threshold for future gifts or inheritances from that person.
If you receive a gift of €100,000 from your parent during their lifetime, and the Group A threshold is €400,000, then the remaining threshold available for an inheritance from that parent would be €300,000. Anything above that amount would be subject to CAT at 33%.
It’s not just inheritances that fall under CAT, gifts are included too. Both are treated as benefits for the purposes of the lifetime threshold. This is an essential point to remember if you’ve been receiving significant financial gifts from family members.
However, there is a small gift exemption you can take advantage of. You can receive up to €3,000 per year, per person completely tax-free, and this amount doesn’t count towards your lifetime threshold.
For example, if your parent gives you €3,000 each year for 10 years, you receive €30,000 tax-free, without reducing your €400,000 Group A threshold.
Inheritance tax planning can be complex, and calculating your exact tax liability should always be done with the help of a qualified tax advisor or accountant. They can guide you through the specific tax rules, exemptions, and filing requirements.
Once you’ve received tax advice, a financial planner can help you structure your finances, recommend strategies to reduce future liabilities, and support your long-term financial goals.
At Fairstone, we offer financial planning tailored to your needs and work alongside your chosen tax advisor to help ensure your wider financial plan is working for you. Book a no-obligation financial planning consultation with us today and secure your financial future with confidence.
Source: Revenue.ie
Related articles:
Inheritance Tax Threshold in Ireland: A Key Issue in 2025’s Budget
Budget 2025: Key Announcements and Implications for Ireland
This article does not constitute tax advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional, independent tax advice. Although endeavours have been made to provide accurate and timely information of the various source material, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future.
