It also raises the question of who is \u201cthe parent\u201d in the case of a divorce and remarriage. Does the birth parent for Class A purposes cease to be a parent on remarriage or can the step-parent become one?<\/p>\n
Mr DL<\/p>\n
I always wonder when I write \u201cby blood\u201d whether it is clearly understood. As with many recurring items, I have set out clearly what that means at one point or another but often revert to the shorthand.<\/p>\n
And yes, it can be counterintuitive if, like me, you grew up in a family where aunts were regarded as aunts regardless of whether they were my parents\u2019 siblings or had married into the family \u2013 and similarly for uncles.<\/p>\n
But Revenue does make a distinction when it comes to inheritance.<\/p>\n
The three inheritance tax thresholds are very specifically delineated according to blood relationship between the person making the gift or leaving the inheritance in their will and the person receiving it.<\/p>\n
Category A, which offers the highest tax-free threshold \u2013 currently \u20ac400,000 \u2013 is generally referred to as covering gifts and inheritances from a parent to a child, but it is slightly wider than that.<\/p>\n
[\u00a0Inheritance tax: How to avoid leaving your loved ones with a hefty billOpens in new window<\/a>\u00a0]<\/p>\n For instance, if it is the child that dies \u2013 as an adult or otherwise \u2013 and the parent who inherits from them, the parent will also benefit from the Category A threshold as long as they are inheriting outright \u2013 rather than, say, getting a life interest in a property.<\/p>\n The threshold will also apply to a child \u2013 anyone under the age of 18 \u2013 where they are inheriting from their grandparent when their parent is dead.<\/p>\n We\u2019ll come back to that Category A in a minute in relation to the second part of your query.<\/p>\n Category B covers close blood relatives other than parents \u2013 or other scenarios covered by Category A. It is sometimes described as lineal relations \u2013 i.e. those in a direct line of descent or ancestry.<\/p>\n Most commonly, that is seen as covering gifts and inheritance from a brother or sister, a grandparent and an uncle or aunt. And yes, it is only aunts or uncles related by blood \u2013 i.e. siblings of one or other parent.<\/p>\n You\u2019re certainly right to query it. I used to think it covered everyone with that title but I did check with the Revenue commissioners and they did confirm that there had to be a blood relationship with the aunt or uncle for them to be covered under Category B.<\/p>\n Category B will also cover life interest inheritance from a child to a parent or any inheritance from a child to an aunt, uncle or grandparent in the unfortunate circumstance of the child predeceasing the older relative.<\/p>\n [\u00a0Will inheritance tax be cut again in the budget?Opens in new window<\/a>\u00a0]<\/p>\n There is a growing clamour \u2013 particularly from people who do not have children \u2013 for reform of this Category B. As it stands, the tax-free threshold under Category B is \u20ac40,000, just 10 per cent of the Category A threshold.<\/p>\n An awful lot of people worry about what other people will pay in tax on an unexpected windfall (inheritance) after they are gone. Personally, I always find that odd but that\u2019s not to say it is not a thing.<\/p>\n There is pressure either to raise this significantly or to find some other device to allow people without children nominate one or two beneficiaries who can avail of a higher threshold. <\/p>\n It is something that has been examined in the Tax Strategy Papers published recently by the Department of Finance<\/a>. These papers examine issues that might be addressed in the budget later this year or a budget further down the line.<\/p>\n As is their wont, this review merely sets out options and, to the degree possible, their likely cost or benefit to the exchequer. Whether one approach should be favoured over another or whether any policy change should be pursued remains a political matter for decision by the Government<\/a>.<\/p>\n Finally, we have Category C which covers all other people benefiting from a gift or inheritance \u2013 sometimes called \u201cstrangers in blood\u201d where the current tax-free threshold is \u20ac20,000. <\/p>\n![\"Many](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/08\/YBJ625PZDZFVPGNOC3YSKVGFHM.jpg\")
Many people worry about what other people will pay in tax on an unexpected windfall (inheritance) after they are gone. Photograph: Getty Images <\/p>\n
![\"The](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/08\/3UYSYWYPHZEYPAHP22GKZ3DRF4.jpg\")
The three inheritance tax thresholds are delineated according to blood relationship between the person leaving the inheritance in their will and the person receiving it. Photograph: Getty Images <\/p>\n