Inheritance tax from UK to Ireland

Discussion in 'Tax' started by Anaximander, 9 Jan 2019.

  1. Anaximander

    Anaximander New Member

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    I am UK born living in Ireland, with Irish citizenship. I am about to come into some money from my parents who were UK citizens (now deceased). There has been some inheritance tax to pay on the UK side and the amount will be above the Irish inheritance tax threshhold including a property. What are the Irish tax implications of this? Will I be liable for tax on the Irish side as well or is there a way of avoiding double taxation? Thanks in advance for useful advice
     
  2. noproblem

    noproblem Frequent Poster

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    In my opinion, Yes, you'll be taxed in Ireland but allowed any tax you have already paid in GB.
     
  3. Marc

    Marc Frequent Poster

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    The double tax treaty covers this.

    The country where the assets are located has the right to tax and the other country gives a credit so as no problem says unlikely to be any tax.

    However for the sake of completeness.

    If you have been living in Ireland for less than 5 years it’s possible that you are non domiciled in Ireland and wouldn’t be subject to Irish CAT in any event.

    If you are caught for Irish CAT and your parents died within the last 2 years and all the beneficiaries to the will are all over 18, then it would also be possible to vary the will to temporarily prevent receiving the inheritance while subject to Irish CAT.
     
  4. RedOnion

    RedOnion Frequent Poster

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    Last edited: 9 Jan 2019
    Hi Marc,
    Are you sure this bit is fully correct? I thought the UK charge Inheritance Tax based on Domicile of the deceased person, but CAT in Ireland was based on Residence (or ordinary residence) of the receiver?

    Actually, rereading it, I think you meant not ordinarily resident, rather than non domiciled, and then it makes sense?
     
    Last edited: 9 Jan 2019
  5. Marc

    Marc Frequent Poster

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    If you are a non-dom and resident in Ireland for 5 years or less then CAT doesn't apply.

    "For non-domiciled individuals, a special statutory relief is provided in the context of CAT. It provides that although they may be tax resident in a given year for income or capital gains tax purposes, that they will only be treated as tax resident for CAT purposes where they have been tax resident for the five previous tax years, prior to the year of assessment in which the gift or inheritance arises. This effectively gives them a five year window without coming within the charge to CAT."

    John Gill, Mattheson
     
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  6. RedOnion

    RedOnion Frequent Poster

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    Thanks Marc,

    I wasn't aware of the different treatment. Thanks for clarifying. I fully understand your post now.
     
  7. Anaximander

    Anaximander New Member

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    Thank you everyone for your input. I am a bit clearer now. I'm going to summarise the info above as I understand it and add any questions arising at the end if that's OK?

    CAT= Capital acquisitions tax - this is the Irish version of UK inheritance tax. One of the ways these differ is that in the UK the tax is taken off the estate, in Ireland the tax is taken off the receiver. Do I have that right so far?

    Tax will already have been paid in the UK on the estate so when I receive the funds/capital/property or whatever I will be taxed in Ireland at the Irish rate less whatever has been paid in the UK? - OK so far?

    If I have that right I have a further question; as a self assessed tax payer in Ireland how do I declare this inheritance? At the time I receive it or with my annual tax return or is there anything else I have to do?

    Thanks again, really appreciate the knowledge.