Group B Inheritance Tax

W

Wheelie Bin

Registered User
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'Morning everyone.

Trying to get my head around Inheritance Tax thresholds. If Joe were to receive two separate inheritances at the same time from both an uncle ,Tom and an aunt-in -law (Tom's wife) , for say €32,500 and €20,000 respectively, is he liable for tax on the €20,000 @33% or is he tax free on both as they are separate contributions.

Also , is €335,000 the total upper limit on the total amount of inheritance one can receive tax free in total from all source, even if say, Joe again was to receive say , a further €335,000 from his parents , in addition to the €52,500 he got from his generous relations.
 
It's a lifetime threshold for gifts and inheritances from that Group. So once he receives €32,500 from an uncle, any other inheritances or gifts from that Group are taxable.
 
The thresholds are all separate.

So he can get €32,500 from his uncles and €335,000 from his father tax-free.

Brendan
 
He can also get €3,000 small gift each year from anyone.

So Uncle Tom, Aunt Tom, Daddy and Mammy can each give him €3,000 each and every year without impacting the thresholds.

Brendan
 

Joe is a child of Tom's brother/sister and so Group B applies to the €32,500 received from Tom. Source:

CAT groups and group thresholds

This page explains thresholds, rates and aggregation rules for calculating Capital Acquisitions Tax
www.revenue.ie

Joe is a 'stranger' in regards to the Group Thresholds as regards any receipts from Tom's wife and so Group C limits apply to this inheritance. Joe can receive €16,250 from Tom's wife and therefore only €3,750 (€20,000 - €16,250) is taxable @ 33%.

The analysis above assumes Joe has received no other gifts (above the small gift exemption) and/or inheritances in these categories.

As Brendan said above, the limits are lifetime limits. If an uncle leaves you an inheritance of €32,500 in 2022 and other one leaves you €32,500 in 2023, the 2023 inheritance is taxable @ 33%.
 
AAAContributor said:
Joe is a 'stranger' in regards to the Group Thresholds as regards any receipts from Tom's wife and so Group C limits apply to this inheritance.
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I had not twigged that. It's a good tax planning point as I would imagine that some uncles leave/gift money in excess of the threshold to their nephews. It's more efficient for the aunt to gift the €16,250.

Brendan
 
Thanks Brendan and AAM Contributor.

So, am I right in saying, in theory that Joe could get:

€335,000 in total from his parents , Liam and Peg,
€32,500 from Uncle Tom , any other uncles or aunt's inheritances or Group B
€16,250 from Auntie in law , Mary, or any other inheritances from "strangers" , Group C .

Total of €383, 750 all totally tax free for his lifetime ?

Plus, Joe can also receive € 12,000 per Anum, in gifts totally tax free from Liam, Peg , Tom and Mary?
In addition, his spouse can receive €12k per anum , tax free as well from Liam , Peg , Tom and Mary?

Plus, just for the sake of it, Joe's wife can also, in theory inherit €383,750 from say her parents , her aunt and her best friend under the same process.

Apologies , if I've misunderstood this.
 
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Thanks everyone. Where else would you get this information on a Bank holiday Sunday afternoon !!
In theory ( and its probably never happened in the history of the state) a married couple could inherit the total of the three thresholds * 2, currently €767,500 absolutely tax free . Lucky Joe !!, but it does illustrate the value of proper estate inheritance planning.
 
Wheelie Bin said:
and its probably never happened in the history of the state
Click to expand...
I'd say it happens often enough. Two only children who arw married and both inherit a family home is the lion's share. The group B and C gifts can be big lumps from favourite uncle / aunt or several smaller gifts from serveral people over your lifetime. It's not uncommon for a person with no children to leave their estate to their nieces and nephews.
 
Wheelie Bin said:
I did mention in one of my posts that Joe's lucky circumstances have probably never happened in the history of the state.
Click to expand...
I'd wager that it has. Plenty of families out there that are wealthy enough to pass money on to nieces / nephews and so on.
 
A theoretical strategy that may not work in practice does not make for good inheritance planning.

People in a position to benefit from agricultural or business relief can receive tax-free gifts and inheritances that would dwarf those enjoyed by the hypothetical Joe.
 
I'm curious about the €16250 Category C inheritance threshold. Is there a limit on the number of times one can make this to different recipients?
I am cognizant of what a poster in another AAM post has said about being careful with correct procedure estate tax planning to but say I wanted to leave , €100,000 to an old friend in a will. The beneficiary has four adult kids, 2 college going and 2 starting careers, and all are agreeable, could I give the €16250 maximum amount each to the friend, her husband and their four young adult children and in doing so save his friend and his family €26812 in Inheritance tax , plus it channels the money where the friend wants it to go, her children's education and careers. My calculations : Contributions (Friend's husband and four kids-€16250*5)+ €19750 ( friend) =€100,000. Tax on €100k would then be only €825 instead of €27637. Does this make sense and is it a reasonable and practical option ?
 
Yes, assuming that the intention was to benefit the 5 people involved. If it turns out that four of them then give it to the fifth person, you could be inviting trouble - if it came out, of course

Each of the five would have to lodge an IT38 form recognising the fact that they have gone over 80% of the Cat C threshold

This also assumes that they have not received any other Cat C gift or inheritence prior and they will also be taxable at 33% on all future Cat C gifts and inheritences
 
Excellent , jpd . That answers all my questions and yes , 100% , the overriding intention is to benefit all parties.
 
A person can only receive it once, but there’s no limit on the number of people someone can distribute €16,250s to.

But if it’s a ruse to get €81,250 into, say, the Mum’s name where €16,250 is gifted to a family of five, you’ve a problem.
 
You refer to the €16250 contributions as “gifted” . Does this mean a person can any person receive this as a one off payment without any reference whatsoever to the giver’s will or does it needed to be noted in the actual will ?
 
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