Lyons Financial Guide to Inheritance Tax

At Lyons Financial Services, we understand that planning for the future includes considering how your assets will be passed on to your loved ones. One critical aspect of this planning is understanding inheritance tax. In this article, we’ll provide you with an overview of inheritance tax in Ireland and offer some key insights to help you make informed decisions.

What is Inheritance Tax?

Inheritance tax, often referred to as Capital Acquisitions Tax (CAT) in Ireland, is a tax levied on the gifts and inheritances you receive from a deceased person. This tax is applicable to a wide range of assets, including property, money, investments, and certain valuable possessions.

Tax Thresholds and Rates

In Ireland, there are tax-free thresholds that determine how much you can inherit or receive as a gift without incurring any inheritance tax. These thresholds depend on your relationship to the deceased person:

Group A: Transfers between parents and children – The tax-free threshold for this group is €335,000. Any amount above this threshold is taxed at a rate of 33%.
Group B: Transfers between siblings, nieces, nephews, and grandchildren – The tax-free threshold for Group B is €32,500, with a tax rate of 33% applying to amounts above this threshold.
Group C: Transfers between non-relatives or distant relatives – The tax-free threshold for this group is €16,250, with a tax rate of 33% for the excess.
Please note that tax rates and thresholds are subject to change, and we recommend consulting with a tax advisor for the most up-to-date information.

Planning Strategies

Lifetime Gifts: Gifting assets during your lifetime can be a tax-efficient strategy. Small gifts, annual gift exemptions, and specific reliefs may help reduce your inheritance tax liability.
Agricultural Relief and Business Relief: If your assets include a farm or a business, certain reliefs may apply, reducing the taxable value of these assets.
Life Insurance: Consider life insurance policies that can help cover the cost of inheritance tax for your beneficiaries.
Estate Planning: Creating a comprehensive estate plan with the guidance of financial and legal experts is crucial to ensure your assets are distributed efficiently and in accordance with your wishes.

Keeping Informed

The rules and regulations surrounding inheritance tax in Ireland can change over time. Staying informed about these changes and their potential impact on your estate is essential. We at Lyons Financial Services are committed to keeping our clients updated on any developments that may affect their financial planning.

Inheritance tax in Ireland is a complex but important consideration in your financial planning. Properly managing this tax can help you preserve your wealth for your loved ones. We encourage you to consult with our financial experts who can provide personalised guidance tailored to your unique circumstances. At Lyons Financial Services, we are here to assist you in making informed decisions and ensuring that your financial legacy is protected. If you have any questions or need assistance with your estate planning, please don’t hesitate to contact us.