‘Massive inequality’ of taxes on inheritance is castigated

THE upcoming budget has been cited as a time for change the “massive inequality” of the national inheritance tax system, with people currently taxed up to a third of the value.

The Mayor of South Dublin County Council, Councillor Francis Timmons has called for changes to the current system for inheritance tax in the country, Capital Acquisitons Tax (CAT).

Calls for reform come after the Summer Economic Statement weighed up reform of inheritance tax rules for people who want to leave their estate to a relative.

CAT is a tax on gifts and inheritances – people may receive gifts and inheritances up to a set value over their lifetime before having to pay CAT.

However, once due, it is charged at the current rate of 33 per cent, and Mayor Timmons has deemed this “not fair or equitable.”

Mayor Timmons said: “It is currently not fair or equitable. We must see equality, fairness and justice for the families and loved ones of an estimated one million childless citizens and over 177,000 cohabiting couples, in how our inheritance tax laws are applied.

“We cannot continue to have the massive unfairness in how inheritance tax laws are applied.”

Thresholds rely on the relation the person inheriting has to the person passing down goods or funds, and there are three groups to categorise this with thresholds as high as €400,000.

Group A relates to the children of the testator or disponer or a parent with an absolutely interest of an inheritance, and the threshold is set at the highest value.

Group B refers to parents of the disponer who take a limited interest of an inheritance, a brother or sister, or a niece or nephew, with the threshold at €40,000.

Group C’s threshold is €20,000 and is mainly tied at those with less immediate relationships to the disponer – it includes benefits taken by uncles, aunts, grand-nephews, grand-nieces, cousins, in-laws and friends.

A benefit received by an uncle or aunt from a nephew or niece is also Group C, despite the opposite being part of Group B. Mayor Timmons described the current makeup of CAT as “a massive inequality” and urged the government to think about altering the current system with Budget 2027.

“This massive inequality and discrimination needs to end. The Minister for Children, Disability and Equality needs to act immediately and in conjunction with the Department of Finance.

“The upcoming budget offers an opportunity to introduce fair and equitable inheritance tax laws.”