Inheritance Tax in Ireland – What You Need to Know
Inheritance Tax in Ireland is officially known as Capital Acquisitions Tax (CAT). It applies when you receive an inheritance or a gift that exceeds certain tax-free thresholds.
Understanding how CAT works — and how to plan for it — can help protect your family’s financial future.
Inheritance Tax is charged on the value of assets you receive, such as:
- Property (including the family home in most cases).
- Savings or investments
- Life assurance proceeds (in some cases)
- Business or farm assets
If the total value you receive from a person exceeds the relevant tax-free threshold, the excess is taxed at 33% (current rate).
Tax-Free Thresholds
The amount you can inherit tax-free depends on your relationship to the person giving the inheritance. Each group has a lifetime tax-free threshold. Once this is exceeded, CAT applies.
Group A
Children (including adopted children:) €400,000
Group B
Close relatives such as siblings, nieces, nephews, and grandchildren €40,000
Group C
All other relationships, including non-relatives: €20,000
Section 72 Life Insurance
Section 72 Life Insurance is a Revenue-approved whole-of-life insurance policy taken out specifically to cover potential Capital Acquisitions Tax (CAT) liabilities arising on death. Unlike standard life insurance, a Section 72 policy’s proceeds are tax-free when used to pay inheritance tax, giving your beneficiaries certainty and peace of mind. Section 72+1
Why Consider a Section 72 Policy?
When you pass away, assets you leave behind — including property, investments or cash — may be subject to CAT. Under Irish law, the beneficiary is responsible for paying the tax, not the person who dies. Without proper planning, heirs may be forced to sell valuable assets simply to meet the tax bill. This insurance:
- Provides a lifetime lump-sum payout on death that can be used to settle inheritance tax liabilities. Section 72
- Ensures the payout is exempt from CAT if used for that purpose. davy.ie
- Gives your loved ones liquidity and flexibility — they can pay tax without rushed sales of property or investments
Section 73 Life Insurance
A Section 73 policy is a type of Revenue-approved life assurance and savings plan in Ireland designed specifically to help with Capital Acquisitions Tax (CAT) liabilities that arise from gifts made during your lifetime. It enables you to save or insure in a tax-efficient way so that funds will be available to pay gift tax when you make substantial lifetime gifts.
Why Consider a Section 73 Policy?
When certain conditions are met, the policy proceeds used to settle the gift tax are exempt from CAT — meaning the money you give to pay the tax on the gifted asset is tax free.
Annual Small Gift Exemption
This allows you to receive gifts up to €3,000 in value from any one person in a single calendar year without paying Capital Acquisitions Tax (CAT).
- This means each donor can give you up to €3,000 in a calendar year tax‑free.
- You can receive multiple small gifts from different people and qualify for the exemption on each one.
- The exemption applies only to gifts, not to inheritances.
- Gifts within the small gift exemption are not included for CAT aggregation purposes.
Example:
If your parents each give you €3,000 in the same year, you can receive a total of €6,000 exempt from CAT — €3,000 from each parent.
Protect What You’ve Built
You’ve worked hard to build your assets — passing them on shouldn’t create a tax burden for your family. With the right inheritance tax and succession planning, you can provide certainty and peace of mind.
Contact us today to discuss Revenue-approved life insurance solutions designed to cover Capital Acquisitions Tax.
Are you confident your retirement plan will give you the lifestyle you deserve?
If something unexpected happened tomorrow, would your family be financially secure?
Providing clarity on frequently asked questions
What is Inheritance Tax (Capital Acquisitions Tax) in Ireland?
Inheritance Tax in Ireland is known as Capital Acquisitions Tax (CAT). It applies when you receive an inheritance or a gift that exceeds the relevant tax-free threshold. Any amount above this threshold is currently taxed at 33% and can apply to assets such as property, savings, investments, life assurance proceeds, and business or farm assets.
How much can I receive tax-free?
The amount you can receive without paying CAT depends on your relationship to the person giving the inheritance or gift. There are three lifetime thresholds:
- Group A (Children): €400,000
- Group B (Close relatives): €40,000
- Group C (All others): €20,000
Once the relevant threshold is exceeded, CAT is charged on the excess.
What is Section 72 Life Insurance?
Section 72 Life Insurance is a Revenue-approved whole-of-life policy designed to provide funds to pay inheritance tax when someone dies. When the policy proceeds are used to pay Capital Acquisitions Tax, they are exempt from CAT, helping beneficiaries avoid the need to sell assets to meet the tax bill.
What is the difference between Section 72 and Section 73 Life Insurance?
Section 72 policies are used to fund inheritance tax liabilities that arise on death.
Section 73 policies are designed to help fund gift tax liabilities during your lifetime. When certain conditions are met, Section 73 policy proceeds used to pay gift tax can be exempt from CAT, making lifetime gifting more tax-efficient.
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