Thresholds<\/p>\n
Capital acquisitions tax (CAT), sometimes referred to as gift or inheritance tax, is a beneficiary tax. It\u2019s payable whenever a beneficiary receives a gift or inheritance that exceeds their tax-free threshold amount. <\/p>\n
\u201cWhat determines the level of CAT is the relationship between the beneficiary and the person making the gift or inheritance,\u201d says Andrea McNamara, director, private client, at EY Law Ireland. <\/p>\n
When a beneficiary receives a gift or inheritance, they can fall into one of three different tax-free threshold groups, depending on their relationship to the person giving, says McNamara. <\/p>\n
A child falls into the Group A threshold and can inherit up to \u20ac400,000 tax-free from a parent. <\/p>\n
The most a person without a child can leave to any one individual tax-free is just \u20ac40,000. <\/p>\n
The recipient of the \u20ac40,000 must be in the Group B threshold of close blood relatives: that includes a sibling, a grandparent, aunt, uncle, niece or a nephew. <\/p>\n
Cousins, close friends, neighbours, carers or others all fall into a Group C threshold. The most they can receive tax-free is \u20ac20,000.<\/p>\n
These thresholds mean parents have the latitude to give big to those who may be dearest to them.<\/p>\n
![\"Ireland’s](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2026\/07\/3LRVMCRVLPZLQEQVATAYSI4ERY.jpg\")
Ireland\u2019s inheritance system of inheritance tax prioritises blood relatives. Photograph: Niall Carson\/PA Wire <\/p>\n
A parent with an estate comprising money and a home worth \u20ac1 million for example can give the whole lot in equal parts to three children who won\u2019t pay a cent in tax.<\/p>\n
A child-free individual, however, can show no such largesse to any one person. They will have to give far smaller amounts to their dearest, and to a far wider group of beneficiaries, to achieve the same tax-free end. <\/p>\n
In effect, they have less autonomy over their money by virtue of their parental status. <\/p>\n
Valid relationships<\/p>\n
Ireland\u2019s system of inheritance tax prioritises blood relatives, and this doesn\u2019t reflect the breadth of people\u2019s real relationships, says Edit member Brigid Timmons. <\/p>\n
\u201cChildless people are as valid in the community as parents, and not every legacy needs to be to a family member,\u201d says Timmons.<\/p>\n
\u201cValid\u201d relationships exist between friends, neighbours, colleagues and carers too, but these are treated as strangers in law, she says. They can inherit just \u20ac20,000 tax-free with the remainder taxed at 33 per cent. <\/p>\n
\u201cBeneficiaries who are blood relatives are offered preferential tax terms, a State incentive if you like, compared to unrelated, category C beneficiaries,\u201d says Timmons. <\/p>\n
\u201cEven where nieces and nephews exist, other people could be a person\u2019s preferred beneficiaries,\u201d says Timmons.<\/p>\n
This needs to be recognised in taxation, she says. <\/p>\n
Sexton gives the example of a home valued at \u20ac600,000, bought and paid for by someone over their lifetime. If given by a parent on their death to their only child, that child would face an inheritance tax bill of \u20ac66,000. <\/p>\n
It\u2019s a significant bill, but nothing like that faced by the beneficiary who is not the child. <\/p>\n
\u201cIf the same home was bequeathed by a childless citizen to a much-loved brother, sister, nephew or niece, they would face a tax bill of \u20ac184,000,\u201d say Sexton. <\/p>\n
A person who doesn\u2019t have children, siblings, nieces or nephews, or wishes to bequeath their home to a much-loved friend, carer or neighbour will see the bequest taxed at 33 per cent, landing their friend with a tax bill of \u20ac191,400, says Sexton.<\/p>\n
![\"Where](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2026\/07\/F3RLHZSSUJDL7NK3EQ3IKCD2FQ.jpg\")
Where a house forms part of a person\u2019s estate, gifting it to a niece or nephew can land them with a sizeable tax bill. Photograph: iStock Spread the love<\/p>\n
If you don\u2019t have children, you have to do significantly more planning to disburse an estate in a way that preserves its value for loved ones. <\/p>\n
Solicitor Marusia Geampana of Coyne Solicitors in Lucan, Dublin, describes a will where a person who didn\u2019t have children left an estate worth \u20ac1.5 million to 13 nieces and nephews. <\/p>\n
Each received the maximum tax-free amount of \u20ac40,000. A preferential niece received the remaining \u20ac980,000 \u2013 with only \u20ac40,000 of this tax-free. She faced a tax bill of over \u20ac300,000.<\/p>\n
A father of four by contrast could have transferred his full estate to these four tax-free. <\/p>\n
Passing on their estate in a way that is tax-efficient is certainly something that weighs on the minds of individuals who don\u2019t have children, says Andrea McNamara.<\/p>\n
\u201cMy advice would be to use all of the available tax-free thresholds to try and make it as tax-efficient as possible and allow as much of the estate to pass as tax-free as possible,\u201d says McNamara. <\/p>\n
Another category of beneficiary to consider is a parent, she says.<\/p>\n
\u201cIf a parent receives a direct or absolute legacy, they fall into the group A tax-free threshold, which means they can receive up to \u20ac400,000 from their child,\u201d says McNamara.<\/p>\n
The parent could then bequeath this to their deceased child\u2019s sibling, with no tax on amounts up to \u20ac400,000. <\/p>\n
If the deceased child had left the money directly to their sibling, however, tax of 33 per cent would apply to anything over \u20ac40,000.<\/p>\n
A parent can also inherit tax-free from a child if the child took a taxable gift from either parent within the five years prior to the child\u2019s death. <\/p>\n
Tax should never be the sole driving force when making a will and individuals should reflect on what they want to happen, says McNamara.<\/p>\n
![\"\"](\"https:\/\/assets.pippa.io\/shows\/67fe6575ad69959fc242080d\/1771886853851-eb3932e2-6994-44a0-97cc-025f85051afb.jpeg\"\/)
\u2018It just absolutely baffles me\u2019: How Ireland\u2019s \u2018single tax\u2019 hurts at weddings as well as mortgages<\/p>\n
\u201cIt shouldn\u2019t be based solely on the tax implications, but certainly if you want to improve tax efficiency, try and use up as many tax-free thresholds of beneficiaries as possible and look at potentially benefiting parents also.\u201d<\/p>\n
Tax-free thresholds can change, Geampana says, so she advises those making a will to phrase things carefully.<\/p>\n
\u201cI had a single lady who had three very close friends. Her will stated she was leaving money to each friend,\u201d says Geampana.<\/p>\n
The current tax-free threshold for friends is \u20ac20,000.<\/p>\n
Instead of specifying this amount, however, the lady put in the caveat that the amount should be up to the maximum threshold in place at the date of her death. <\/p>\n
This ensures her wish that her friends benefit from the maximum tax-free amount.<\/p>\n
Those without children should note that there can be some exemptions where nieces and nephews can \u201ccome to the table\u201d as children, says Geampana.<\/p>\n
For example, if someone is running a farm or a business, and a niece or nephew has been working with them for five years assisting in the trade or business.<\/p>\n