"Childless couples are being discriminated against when it comes to CAT"

Brendan Burgess said:
So the first [€400k] of any gifts or bequests are exempt. The rest are taxed at 33%.
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What is the "first" €400k of bequests though - I can see how that alone could lead to a lot of legal wrangling, over whose inheritance is tax free and whose isn't.

How, and by whom, is the tax actually payable? In the event that it isn't paid, who should be on the hook, who are Revenue to chase after? Is it something that needs to be dealt with by the executors administering the estate, or by the recipients after the fact.
 
I find the phrasing interesting.

Childless is used as opposed to childfree which seems to becoming much more common, perhaps usually but I understand not always to reflect a choice not to have kids.

Also couples is used but the discussion isn't really just about couples though is it? Could very well be single people.

I suspect the argument is being framed for us to picture a couple who have been unable to have kids and instead have been very involved in a nephew or niece or nephews life and they would have been like a son or daughter. I don't doubt that such a case exists but not sure what percentage would fall into that.

Of course its all a bit irrelevant anyway because its not the person gifting that pays the tax...
 
As is fairer to childless couples?

Family sizes are reducing anyway. Most families nowadays have either one or two children. Gone are the days with larger average families.

Also look at people in your circle I suspect there are more of them childless then the same demographic would have been 40 yrs ago and most likely will remain childless.

The tax system needs to move with the times.
 
ClubMan said:
Unless multiple bequests/gifts happen on the same date then I don't see where any ambiguity arises?
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I'm verging on a headache after thinking about all of this for a while...

In the current CAT system, the valuation date is the date on which the value of the inheritance or gift is fixed for tax purposes — and it’s not always the same as the date of inheritance. For example, with certain assets, the valuation date could be when the beneficiary actually becomes entitled to possession or enjoyment, not when the disponer dies.

That works under the existing donee-based rules because you’re only concerned with the recipient’s own threshold and the taxable value of their benefit at that point in time.

But if you move to a disponer-based lifetime limit, that neat separation starts to break down. Suddenly, you’d need to figure out — as at each valuation date — where the disponer stands against their lifetime allowance, and which part of that specific gift or bequest falls inside or outside the remaining pot.

The difficulties multiply where:

  • Multiple gifts/bequests are made at the same time (most common on death but can happen in gifting too).
  • There are life interests with reversions — how do you allocate the allowance between a life tenant now and a remainderman decades later?
  • Trusts are involved — do distributions “burn” the disponer’s lifetime limit, and how do you handle settlements already in place?

The current valuation date rules are already a bit of a minefield; add a disponer-lifetime allowance, and you’re inviting both technical complexity and fertile ground for disputes.
 
I still don't see why the solution is to change the tax to a disponer focus - the same objective can be achieved, more fairly in my mind, by allowing everyone the same lifetime threshold, regardless of relationship to the disponer. So everybody can receive (say) €500k from any source, before they hit tax.
 
The Horseman said:
As is fairer to childless couples?
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No. They pay no CAT in either circumstance.
As has been pointed out as nauseum. The tax code should not be adjusted to cater to the feelings of dead people on bills they need never see.
The Horseman said:
The tax system needs to move with the times.
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The government are looking at ways to boost family size as it is a huge problem. Adjusting the tax system such that we charge a higher tax rate on individuals based on the number of siblings they have seems counterintuitive.
If I have no siblings I can inherit €400k tax free. If I have 3 siblings I can only inherit €100k tax free.
 
Just to vomit out the last of my migraine-inducing ruminations, the list of major issues jumping out at me (and yes, this is me pasting the conclusion of a lengthy back & forth with CGPT):

Lifetime tracking of every disponer
Revenue would need a central register recording every gift/bequest made by every individual, for decades. That’s a huge administrative burden, with compliance heavily reliant on full disclosure.

Information black holes for recipients
A beneficiary would have to know the disponer’s entire lifetime giving history to know if tax applies. If that’s incomplete or wrong, they could end up with an unexpected bill years later.

Rich-network windfalls
Those with multiple wealthy relatives or friends could collect unlimited tax-free inheritances, because each disponer has their own pot. This shifts inequity rather than solving it.

Succession law tangles
Valuation date vs date of inheritance becomes far more contentious when you’re deciding which part of an estate uses up the disponer’s allowance. Add in life interests, reversions, and trusts, and the legal complexity spikes.

Executor conflict
On death, multiple bequests happen at once. Who gets the tax-free portion? Pro-rata split? First-named beneficiary? The scope for arguments and litigation is obvious.

Clawback chaos
If it turns out the disponer’s limit was breached years ago, who pays? The estate? Prior recipients who’ve spent the money? Both? It’s a recipe for disputes and politically toxic recoveries.
 
torblednam said:
. So everybody can receive (say) €500k from any source, before they hit tax.
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I agree this is more sensible & practical (and ‘fairer’) than the disponer view.

The issue I’d see arising, however, is that most people view the €400k allowance to allow transfer of the family home (which is sensible given it’s where the majority of transfers occur). An early transfer from a wealth uncle or aunt could then lead to no tax relief remaining on the family home transfer.

Clearly this doesn’t stand up to logical scrutiny but none of this debate around CAT does. It won’t stop hard cases pushing to change the rules again.
 
As it currently stands an estate worth €400k is tax free to a child of the deceased. Whereas the estate of for example an single uncle to the same receiptent attracts tax €100k plus in tax.

If the disposer has one €400k allowance then he can use as he sees fit. A parent is not losing out as he has the same €400k allowance that he can use.

In most circumstances the parent will obviously use it for his child.
 
In these circumstances you can pay the tax on the inheritance from the wealthy uncle and retain your tax free allowance for your inheritance from your parents.
 
You're still stuck viewing it from the perspective of a person who isn't being taxed.

The tax is on windfall gains arising to people via wealth transfers.

There's plenty of scope for passing on your estate without anyone being taxed, if you want to; if you want to pass it to someone who's already fortunate enough to have received substantial windfalls, then THEY will be taxed on it.

I remain unconvinced of genuine inequity in the current regime, and even less so under the No Groups, Single Threshold hypothetical I posited.
 
Zion2022 said:
Given the proposal increases tax on everyone with a sibling (and a wealthy parent) by at least €66k (increasing further with each sibling), I think it’s safe to say this kite will never fly
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Well leaving aside the amount of the threshold, which TBF can be altered on political whim, it's just the total impracticality of the thing I'm talking about.
 
The Horseman said:
In these circumstances you can pay the tax on the inheritance
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I can confidently say the percentage of people in this circumstance who will voluntarily make early payment of €100K+ to save a potential bill of equal size at some unknown future date is close to 0%…because it would make no sense to do so.

Setting some of the earlier inheritance aside notionally to cover a future tax bill the family home would make sense. I would confidently say the percentage of people with the discipline to do this is less 20%.
 

Group A​

The Group A threshold applies where you, the beneficiary, on the date of the gift or inheritance are:

a minor child, under 18 years of age, of a deceased child of:
  • the disponer

So the grandparents could have given the child a gift while they were under 18!
 
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