Up to the recent past, most people inheriting assets on the death of their parents escaped Inheritance Tax. They did this by virtue of the fact that each child could receive more than €500,000 tax free from their parents. In addition, there were generous tax reliefs available where the values of certain business or agricultural assets were heavily discounted before the tax free threshold was applied.
That landscape has changed since the economic crisis. The Gift / Inheritance tax rate has increased from 25% to 30% and, more importantly, the tax free threshold has now reduced to €250,000 for each child. While asset values are lower, in practical terms, many more people are now paying Gift or Inheritance Tax and indeed sizeable tax payments are becoming more frequent, particularly for inheritances.
In my recent article of the same name, Gifts and Inheritance Tax Planning – Shifting Goalposts, available in the Articles Section of our website, I discuss some simple tax planning strategies for those of more modest net worth and also examine some significant pending changes under the Finance Act 2012 to Capital Gains Tax Retirement Relief which are very important to higher net worth individuals.
For further advice on tax planning measures, please contact Fergal McManus of Morgan McManus Solicitors.