The amount of tax payable by a person on receipt of a gift/inheritance depends on:
- the amount of the gift/inheritance,
- the relationship between the parties, and
- whether the person received a previous gift from someone in the same threshold group.
The amount of a gift/inheritance that can be received tax free is known as the Threshold.
Where you receive a gift/inheritance from your spouse or civil partner, no inheritance tax is due. The gift/inheritance received is free from tax.
The current Thresholds for 2024 are:
| Group | Relationship | Threshold |
| A | Son/daughter/minor Child of a deceased Child. Child also includes adopted children, step-children, long-term foster children (this is subject to conditions) and a child of a Civil Partner/minor Child of a deceased Child of a Civil Partner. Certain nieces and nephews may also be able to avail of group A provided certain conditions are complied with. |
€335,000 |
|
B |
Brother/Sister/Niece/Nephew/Aunt/Uncle/Grandchild/Grandparent and a child of a Civil Partner of a Brother / Sister. |
€32,500 |
|
C |
Relationship not covered by Group A or B, e.g. cohabiting partners, distant relatives and friends. |
€16,250 |
Gifts/Inheritances received by a beneficiary above the Threshold amount are subject to inheritance tax.
The current rate of tax payable by a beneficiary is:
| Gift/Inheritance | Tax Rate |
| Up to Threshold amount | Nil |
| Amounts received over the Threshold amount | 33% on gifts/inheritance |
The previous rate of tax payable by a beneficiary is:
| Gift/Inheritance | Tax Rate |
| Up to Threshold amount | Nil |
| Amounts received over the Threshold amount | 30% on gifts/inheritance received on/after 7/12/ 2011 and 5/12/2012 |
| 25% on gifts/inheritance received between 08/04/2009 to 06/12/2011 | |
| 22% on gifts/inheritance received between 20/11/2008 to 07/04/2009 | |
| 20% on gifts/inheritance received prior to 19/11/08 |
The reason the old tax rates and old thresholds are important is seen in the examples below. The rate of tax you pay is the rate of tax as and at the date of death.
Example No 1
Question : What tax would Sarah Murphy pay who received a gift from her uncle in his will in the amount of €50,000. Sarah’s uncle died on the 1st January 2024. Sarah received no previous gift from her uncle or from any other Group B relative (this is important and is dealt with below).
Answer: The Threshold that applies here to Sarah’s is the Group B Threshold. The amount of this Threshold on the date of her uncles death is €30,150. The calculation of Sarah’s inheritance tax is as follows:
| Inheritance | €50,000 |
| Threshold | (€32,500) |
| Taxable Value | €17,500 |
| Tax Payable @ 33% | €5,775 |
Example No 2.
Now using the same example but instead Sarah’s uncle died on the 12th February 2012. What tax is due to be paid by Sarah Murphy?
Answer : the same Threshold applies which is Group B but the applicable amount is €33,208 and the rate of applicable tax is 30%
| Inheritance | €50,000 |
| Threshold | (€33,208) |
| Taxable Value | €16,792 |
| Tax Payable @ 30% | €5,037.60** |
Note: **interest would be due on the inheritance tax if this is only being discharged now.
Previous Years’ Tax Thresholds
The Tax Thresholds for the previous 10 years are set out below for each Group.
| Year | Group A | Group B | Group C |
| 10/10/2018 – 08/10/2019
12/10/2016 – 09/10/2018 14/10/2015 – 11/10/2016 05/12/2012/ – 13/10/2015 07/12/2011 – 04/12/2012 01/01/2011 – 07/12/2011 08/12/2010 – 31/12/2010 01/01/2010 – 07/12/2010 |
€320,000
€310,000 €280,000 €225,000 €250,000 €332,084 €332,084 €414,799 |
€32,500
€32,500 €30,150 €30,150 €33,208 €33,208 €33,208 €41,481 |
€16,250
€16,250 €15,075 €15,075 €16,750 €16,604 €16,604 €20,740 |
Aggregation – receiving previous gifts
If the inheritance or gift is received on or after 5 December 2001, then all inheritances and gifts received within the threshold group since 5 December 1991 are aggregated.
I will use the example above of Sarah Murphy to show how this rule applies:
If Sarah Murphy had also received a gift from her aunt in 2000 in the amount of €40,000. The amount received from her uncle and aunt are added together as they belong to the same Group B Threshold. As the combined amount is greater than the current threshold figure, Sarah is liable to pay more inheritance tax.
However, if Sarah also received a gift from her father in 1994 of £100,000, this amount is aggregated with the other two amounts as they belong to different a different threshold group.
The information set out above is to act as a guide only and is no substitute for specific advice specific to your individual circumstances. professional advice should always be sought as the law and tax law in particular is always changing and affects each person differently.
