Sunday 22 October 2017

Government reneges on promise to raise tax-free thresholds

Former finance minister Michael Noonan had promised to raise the tax-free threshold to allow children to receive up to €500,000 from their parents without paying tax
Former finance minister Michael Noonan had promised to raise the tax-free threshold to allow children to receive up to €500,000 from their parents without paying tax
Charlie Weston

Charlie Weston

THERE was disappointment for families at the failure to make any changes to the inheritance tax regime.

The Government had committed to making ongoing changes in the tax-free thresholds that apply before the tax kicks in, but there were no announcements made this year.

This was despite calls to widen the tax-free thresholds for gift and inheritances, especially in cases where childless couples want to leave assets to a close relative.

Former finance minister Michael Noonan had promised to raise the tax-free threshold to allow children to receive up to €500,000 from their parents without paying tax.

Last year's budget raised this threshold to €310,000.

The tax is levied at a rate of 33pc for amounts over the tax-free thresholds. The formal name for the tax is capital acquisitions tax (CAT).

But Finance Minister Paschal Donohoe has decided to make no changes to the tax-free thresholds categories.

The tax-free threshold that applies when parents are leaving property and other assets to children stays at €310,000. This is known as Group A.

There had been strong calls for an increase in the threshold that applies when a gift is made to a brother, sister, nieces and nephews and grandchildren. This is known as Group B.

Linear relatives can receive €32,500 before they have to pay inheritance tax.

What are called "strangers in blood", or people who are not related, can receive €16,250 before paying the tax. This is known as Group C.

Solicitor Susan Murphy (inset), of MakeMyWill.ie, said it was surprising that there was no mention of any increases in the CAT inheritance/gift tax-free thresholds.

"This, despite assurances last year that the Government were striving to bring the Group A threshold up to €500,000 over the next few years," she said.

It was hoped that the thresholds would increase again this year, to bring them closer to the thresholds pre-recession, Ms Murphy said.

The threshold in early 2009 was €542,544 for Group A (when a parent is leaving assets to a child). It was €54,254 for Group B (siblings, nieces, nephews, grandchildren), and €27,127 for Group C (everyone else).

Irish Independent

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