I’ll look at some gift and inheritance tax tips this week as this is fresh in my mind. My mind is only recovering now and was less than fresh earlier in the week. I was at All Together Now over the weekend and it was just brilliant. It has taken a few days to get the brain function back to normality. We’ve helped 11 clients with CAT returns in the last few months. In 2025 we did one CAT return. CAT stands for Capital Acquisitions Tax which is Gift and Inheritance Tax. With different scenarios and interesting cases, you may get something out of the tips I’ll go through with you. These are

• Stepping into the shoes
• Free of Tax
• Non-resident beneficiary
• File a tax return
• Summary

Stepping into the shoes

Stepping into the shoes is known as surviving spouse or surviving civil partner relief. It applies where;

• On the date of the gift or inheritance your spouse is dead
• You receive a gift or inheritance from a person who was related to your spouse
• At the time of your spouse’s death, they were of nearer relationship to the disponer (person giving the gift/inheritance) than you are

You are stepping into the shoes of your deceased spouse. The advantage of this is you can benefit from a more favourable group threshold.

Mary Bolton is 60 years old. Her husband John Bolton died two years ago. John’s Dad and Mary’s father-in-law, Rhys Bolton, owns a house in Douglas Cork that’s valued at €500,000 and €100,000 in cash that he leaves to Mary in his will. Mary isn’t related to Rhys and without this relief she would get the Group C stranger threshold of €20,000. Her inheritance tax liability would be

Value of inheritance	€600,000
Less Group C Threshold	(€20,000)
Taxable value	€580,000
Tax Payable 33%	€191,400

However, Mary steps into the shoes of her husband John. As John is the son of Rhys, Mary can get the Group A threshold from parent to child. Mary confirms that she never received a gift or inheritance from her parents before. As a result, she has the full Group A threshold available which is €400,000.

Value of inheritance	€600,000
Less Group A Threshold	(€400,000)
Taxable value	€200,000
Tax Payable 33%	€66,000

This relief has saved Mary €125,400 which is €380,000 x 33%.

One note of caution here. This relief is compulsory. Let’s assume Mary already used up her full Group A threshold after receiving an inheritance from her mother a few years ago. In that case, the €600,000 she gets from her father-in-law would be taxable in full. She couldn’t elect to use the Group C threshold instead.  

Free of Tax

The free of tax benefit is where the disponer pays the tax liability for the recipient. I wrote about a fortunate son a few weeks ago. This case involves a fortunate daughter. Jessica Fletcher’s daughter Abbi lives in Galway with 3 kids. Abbi lives in a gorgeous house in a nice area but there’s not a lot leftover every month after paying the mortgage, car loan and creche fees. She inherited €360,000 five years ago when her dad passed away and used that money towards her new home.

Jessica wants to pay off Abbi’s mortgage which is €150,000 as this will save Abbi about €1,200 a month. Jessica also wants to pay the tax bill on this. Jessica’s tax liability is

Value of Gift	€150,000
Less small gift exemption	(€3,000)
Net Value	€147,000
Less balance of Group A threshold	(€40,000)
Excess	€107,000
Tax on Excess amount 33%	€35,310
Total Benefit	€142,310
Tax Payable at 33%	€46,962

As you’ll see, the tax on the net benefit of €107,000 is added to this figure to arrive at the total benefit. The tax liability for Jessica is 33% of that total benefit number.

Non-resident beneficiary

What happens when there is a non-resident beneficiary? My understanding is that the Law Society recommends the solicitor holds onto the funds until he/she gets Revenue clearance. Now there’s an online process to get Revenue clearance which is a 3-step process.

1. File the tax return for the non-resident
2. Pay the CAT liability
3. Apply for clearance through My Enquiries

Once you do this there is an automatic reply from Revenue which states that they will review the submission and will contact you within 35 days if more information or an intervention is to take place.

And if you don’t get a response within 35 days, you can distribute the funds to the non-resident beneficiary. It also confirms that the Revenue won’t hold the agent, personal representative, executor or solicitor responsible for the taxes where they can show they undertook the necessary due diligence. As far as I know that 35 days is 35 working days.

It would be normal for the non-resident beneficiary not to have enough funds to pay the tax. You must remember the solicitor is holding their money until we get clearance. In such a case the solicitor should release funds to clear the liability.

What’s different for a non-resident?

There’s not much difference for a non-resident compared to a resident beneficiary. The main difference is the timing of the return and payment. Most non-resident beneficiaries will want to receive funds from their solicitor as soon as possible. It makes sense for them to get the return filed and make the payment before the pay and file deadlines. That deadline is the 31^st of October 2026 which can be extended to the 18^th of November 2026 when paying and filing online. This deadline is where you receive a gift or inheritance in the year ended 31^st of August 2026.

If you leave it to the deadline and have to wait up to 7 working weeks from those dates, it will be 2027 before clearance comes in.

I don’t really understand why solicitors hold onto all of the funds, and some aren’t released to the non-resident beneficiary. Surely the tax can’t be anymore than 33% of the inheritance amount! That’s before taking costs and group thresholds into consideration.

File a CAT Return

The normal rule is you must file a CAT return if the value of the gift or inheritance exceeds 80% of the group threshold. The thresholds are

Group	Current Threshold	80%
Group A – Parent to child or to a minor child of a deceased child	€400,000	€320,000
Group B – Siblings, nephews, nieces or lineal descendants	€40,000	€32,000
Group C- uncles, aunts, grandnephew, grandniece, cousins, in-laws and friends	€20,000	€16,000

One key point to remember is that these thresholds are lifetime limits. All gifts and inheritance received from the 5^th of December 1991 are added together. Say your dad passed away in 2005, and you received €125,000 on his death. Your mam passes away in 2025, and you receive €250,000 on her death. You have received €375,000 in total which is below the €400,000 Group A threshold. Even though you have no tax to pay, you’ll still need to file a CAT return as the combined inheritances exceed 80% of the Group A threshold.

Business Property Relief

When claiming business property relief or agricultural relief you must file a CAT return irrespective of the value of the property gifted or inherited. The thresholds don’t come into play. You must file a return to claim either relief. I wrote about BPR a few weeks ago and how Tom Gruber got a gift of shares from his dad worth €300,000. With a 90% deduction for BPR, he only used €30,000 of the Group A parent child threshold. The value of €300,000 was below the 80% threshold. But as we were claiming BPR, we had to file a CAT return IT38 and claim the relief in that.

Summary

The stepping into the shoes relief worked out really well for Mary Bolton. It saved a huge amount of tax for her. It usually works out in the taxpayer’s favour unless they have already used up the Group threshold they are moving up to.  The free of tax benefit was even better for Abbi Fletcher. She not only got her mortgage paid off by her mam but got the tax liability on that gift sorted by her mam too.

For non-resident beneficiaries’ patience is a virtue. You’ll get your money but only after Revenue are happy with your CAT return and payment. It makes sense that your solicitor will help you out by paying the tax liability from the funds they hold for you. The filing of CAT returns is an interesting one. Revenue don’t get any tax, but they get information. Then if you get another inheritance down the line, they’ll know the amount and the relationship of the disponer to you. They’ll know the liability before you do! BPR and Agricultural relief are the man CAT reliefs. These are valuable to you and Revenue want this information. They can check if the claims are valid and will have the dates and amount in the event of any future clawbacks.

Need any help with your gift or inheritance tax returns? If so, start here