CAT / Inheritance Tax

Quick Question:

I'll be receiving a substantial sum (inheritance) from the UK over the next week or two. Here's my pickle - Sterling/Euro has moved significantly against me in the last couple of weeks & I reckon a hike in the CAT/Inheritance tax rate is pretty damn likely in the next budget (December 7th).

What I'd like to do is: Hold the money in sterling in a TD Waterhouse account until the exchange rate improves, and pay the 25% CAT tax due as soon as I receive the amount before Brian Lenihan has a chance to hike up the rate.

So my basic question is, will I be able to pay the CAT to revenue based on a 'paper' conversion to euro on the day I receive it, or would I have to physically convert the whole amount to euro and then pay the tax etc.

Hope all that makes sense!

You don't have to convert the Sterling to Euro. Just use the rate for the day that you receive the inheritance to convert it to Euro and pay your liability based on that figure.

How substantial is "substantial" and who's it from (in the context of its "group" for CAT purposes)?

Cheers Baz.

I would say that the CAT allowances could be more or less eliminated in the budget.

However why have you chosen to pick a stockbroking firm to leave your money with. The best sterling rates are with the Ulster Bank.

PM me if you want further details.

Your CAT will be calculated using a valuation date - this will normally be the date you receive the inheritence. Whether you convert the amount from £s to €s, bring the amount back into local bank or leave it on deposit in the UK is irrelevant from the purpose of the CAT.

You will have to file a IT38 with the amounts and pay the tax. I think the CAT year runs from Sept - Aug so you will have until next Sep 30 to file - and probably pay, but you need to check this. The rates of CAT etc will be those of the day of valuation.