Inheritance tax is one of those things that can be easy to put off thinking about. After all, planning for what happens to your estate isn’t exactly top of everyone’s to-do list.

However, when significant assets, property, businesses or family wealth are involved, the tax implications for those receiving an inheritance can be considerable. Planning ahead can help families understand their potential exposure, make use of available reliefs and exemptions, and avoid an unexpected tax liability at an already difficult time.

So, what do you need to know about inheritance tax in Ireland?

What is Capital Acquisitions Tax?

Capital Acquisitions Tax (CAT) is the tax that can arise when someone receives a gift or inheritance.

A person can receive gifts and inheritances up to a certain tax-free threshold before CAT becomes payable. The threshold available depends primarily on the relationship between the person providing the gift or inheritance – known as the disponer – and the person receiving it – the beneficiary.

The current rate of CAT is 33% and applies to the taxable amount above the relevant tax-free threshold.

Importantly, the thresholds are not necessarily available afresh for every inheritance. When calculating CAT, taxable gifts and inheritances previously received within the same group threshold on or after 5 December 1991 generally have to be taken into account.

What are the inheritance tax thresholds in Ireland?

There are currently three CAT group thresholds:

Group A – €400,000

The Group A threshold generally applies where the beneficiary is a child of the person providing the gift or inheritance. A child includes an adopted child and stepchild, while certain foster children may also qualify. Group A can also apply in some other specific circumstances, including certain inheritances received by a parent from a child.

Group B – €40,000

The Group B threshold generally applies to gifts and inheritances received by certain relatives, including brothers, sisters, nephews, nieces, grandparents and grandchildren. It can also apply to parents in certain circumstances.

Group C – €20,000

The Group C threshold applies where the relationship between the disponer and beneficiary does not fall within Group A or Group B. This can include, for example, cousins, friends and certain other relatives.

Gifts and inheritances between spouses or civil partners are exempt from CAT.

These thresholds apply to gifts and inheritances taken on or after 2 October 2024.

How is inheritance tax calculated?

Let’s take a straightforward example.

Áine previously received a gift of €80,000 from her parents towards the deposit for her home. She subsequently receives an inheritance of €400,000 from her parents’ estate.

For CAT purposes, assuming both benefits fall within Group A and no exemption applies, the taxable benefits are aggregated.

Áine has therefore received a total of €480,000.

Her Group A tax-free threshold is €400,000, leaving €80,000 potentially subject to CAT.

At the current CAT rate of 33%, this would result in a potential CAT liability of:

€80,000 × 33% = €26,400

The exact calculation in any individual case can depend on previous gifts or inheritances, available exemptions and reliefs, and the nature of the assets involved.

Reliefs and exemptions from inheritance tax

A number of important reliefs and exemptions can reduce or, in certain circumstances, eliminate a CAT liability.

However, these reliefs are subject to qualifying conditions, so it is important not to assume that an exemption automatically applies.

Dwelling House Exemption

An inheritance of a dwelling house can be exempt from CAT where certain conditions are satisfied.

Broadly, for an inheritance, these conditions can include:

  • the property being the only or main residence of the person who died at the date of their death;
  • the beneficiary having occupied the property as their only or main residence for the three years immediately before the inheritance;
  • the beneficiary not owning, or having an interest in, another dwelling house at the date of the inheritance;
  • the beneficiary not acquiring an interest in another house from the same disponer between the inheritance date and valuation date; and
  • the beneficiary continuing to occupy the property as their only or main residence for six years following the inheritance.

There are exceptions to some of these conditions, including in certain circumstances for people aged 65 or over, dependent relatives and where a person is required to live elsewhere because of employment or infirmity.

The rules applying to a gift of a dwelling house are more restrictive. Broadly, the beneficiary must be a dependent relative and meet the other relevant qualifying conditions.

Small Gift Exemption

You can receive a gift of up to €3,000 from any one person in a calendar year without paying CAT on that gift.

Importantly, gifts qualifying for the Small Gift Exemption do not reduce your available Group A, B or C lifetime threshold.

This can make the exemption particularly useful as part of longer-term family wealth and succession planning.

For example, two parents could each give a child €3,000 in a calendar year, allowing that child to receive €6,000 tax-free under the Small Gift Exemption.

Where gifts are made to several family members, the exemption can potentially be used separately for each recipient.

Agricultural Relief

Where a person receives qualifying agricultural property by gift or inheritance, Agricultural Relief can reduce the taxable value of that property by 90%, subject to the relevant conditions.

Among the key requirements are an asset test and an active farmer test. Broadly, at least 80% of the beneficiary’s property must consist of agricultural property at the valuation date, and qualifying farming or leasing conditions must also be satisfied.

Given the value of agricultural assets, this can be a significant relief, but careful consideration of the qualifying conditions is essential.

Business Relief

Business Relief can also reduce the taxable value of qualifying business property by 90%.

The relief can apply to qualifying businesses, interests in businesses and shares or securities in certain companies. However, detailed conditions apply and certain assets can be excluded.

For business owners considering succession, understanding whether Business Relief is available well in advance of a transfer can be particularly important.

Section 72 Life Assurance

A Section 72 life assurance policy can also form part of inheritance tax planning.

A qualifying policy can be taken out specifically to provide funds to meet an inheritance tax liability arising on death. Subject to the relevant conditions, policy proceeds used to pay qualifying inheritance tax can themselves be exempt from CAT.

For individuals with significant estates or assets that may be difficult to convert quickly into cash, a Section 72 policy can provide beneficiaries with liquidity to meet an inheritance tax bill without necessarily having to sell inherited assets.

Other inheritance tax planning considerations

Inheritance tax planning isn’t simply about reducing a future tax bill. It should form part of a wider conversation about how and when assets are transferred.

For example, it may be worth considering whether assets should be transferred during a person’s lifetime or passed through their Will.

The tax consequences can be very different.

A lifetime gift may potentially have Capital Gains Tax (CGT), Capital Acquisitions Tax (CAT) and Stamp Duty implications, depending on the circumstances.

By contrast, a transfer of assets on death does not generally trigger CGT on the deceased’s death or Stamp Duty on the inheritance itself, although CAT may arise for the beneficiary.

That doesn’t necessarily mean waiting until death is always the better option. Where an asset is expected to increase substantially in value, an earlier transfer may form part of an effective succession strategy.

The important point is to consider the overall tax position before making the transfer rather than afterwards.

When do you have to file and pay CAT?

The CAT filing and payment deadline depends on the valuation date of the gift or inheritance.

Where the valuation date falls between:

  • 1 January and 31 August, the normal pay and file deadline is 31 October of that year; or
  • 1 September and 31 December, the normal deadline is 31 October of the following year.

A CAT return is generally required where the total taxable value of benefits taken within the relevant group exceeds 80% of the applicable group threshold, even where no CAT is ultimately payable.

A return is also required when claiming Agricultural Relief or Business Relief, even where the 80% threshold has not been reached.

For 2026 specifically, Revenue has extended the deadline to 18 November 2026 for qualifying taxpayers with relevant valuation dates in the year ended 31 August 2026, provided both the CAT return and payment are completed through ROS.

What happens if you file your CAT return late?

It pays to get the deadline right.

Revenue currently applies a surcharge of:

  • 5% of the CAT due, up to a maximum of €12,695, where the return is filed less than two months late; or
  • 10% of the CAT due, up to a maximum of €63,485, where it is filed more than two months late.

Interest may also apply to late payments. The current daily interest rate for relevant late CAT payments is 0.0219%.

Rather than waiting until a filing deadline is approaching, inheritance and succession planning should ideally begin much earlier.

Why get tax advice on inheritance planning?

No two families, estates or businesses are exactly the same – and inheritance tax planning shouldn’t be approached as though they are.

At Fitzgerald Power, we work with individuals, families and business owners to understand what they want to achieve and the tax implications of transferring wealth to the next generation.

That can include reviewing potential CAT liabilities, succession planning, lifetime gifting, business and agricultural reliefs, dwelling house exemptions and the wider tax implications of transferring property and other assets.

The earlier these conversations happen, the more options there are likely to be.

If you’re considering succession, transferring assets or simply want to understand the potential inheritance tax exposure for your family, speak to Brian Kelly and our Taxation team.