Favourite Nephew/Niece Relief is a substantial relief which allows a niece or nephew to be treated as if they were a child of the individual for inheritance tax purposes.
How to claim the relief
In order to claim this relief, the niece or nephew must have worked substantially on a full-time basis on the farm for their aunt/uncle for a period of at least 5 years prior to the date of the gift/inheritance.
“Substantially on a full time basis” generally means at least 24 hours a week, but if all the farm work was carried out just by the farmer, his spouse and the nephew/niece, then 15 hours a week would be sufficient to meet the criteria.
Thresholds
The current threshold for a child is €335,000, whilst a nephew or niece has much more reduced threshold of €32,500.
The difference is substantial and again highlights the importance of estate planning.
There are however conditions attached to the relief. In order to qualify for the relief, the niece or nephew must have worked on a full-time basis in the business/farm for a minimum period of 5 years prior to taking over the interest in the business/farm. This would require 15 hours per week where the business is small, and 24 hours per week where the business/farm is large.
Note: favourite niece/nephew relief has been extended so that it is available to the child of a civil partner’s brother or sister.
For further information, please Contact Us to arrange a consultation.
