CAT - aggregation of prior benefits

M

Mark Rogers

Registered User
Messages
4
I have a question about aggregation of prior benefits for CAT – in effect whether you are required to effectively back pay tax on benefits received pre 2011 when the thresholds were higher and the tax rate was lower (20% vs 33%).


I inherited 42,000 euro in 2003 from an uncle when the CAT threshold for Group B was 45,644 euro. So no CAT was payable at that time.


I have recently received a 30,000 euro inheritance from an aunt who died in October 2016 when the Group B threshold was 30,150 euro.


My total lifetime Group B inheritances therefore are 72,000 euro. Is the CAT I must now pay (by 31 October):


13,810 euro i.e. £41,850 (i.e. £72,000 total received less 30,150 tax free threshold) x 33%


Or


9,900 euro i.e. 30,000 x 33% (i.e. new inheritance only but not taxed on the first inheritance above the current lower threshold)
 
CAT aggregation rules
Current Capital Acquisitions Tax (CAT) aggregation rules (post 5 December 2001)
Aggregation rules for an inheritance or gift are those that apply at the date of death or the date of the gift. The valuation date, which determines the due date for CAT, is not relevant to aggregation rules.

To calculate the tax you owe on the latest benefit, add all inheritances or gifts you have received under the same group threshold from 5 December 2001 as follows:

  1. Identify the group threshold applicable to the current benefit.
  2. Add together the taxable value of all prior benefits received under this group threshold since 5 December 1991.
  3. Calculate the unused balance of the group threshold.
  4. Subtract this amount from the value of the current benefit.
  5. This is the excess amount you must pay tax on.
Example of Current CAT aggregation rules (post 5 December 2001)
Group threshold applicable to current benefit €30,150
Prior benefits in this group threshold €42,000
Unused threshold (€30,150 - €42,000) negative, so none
Current benefit €30,000
Amount you must pay tax on €30,000 x 33% = € 9,900
 
jpd said:
CAT aggregation rules
Current Capital Acquisitions Tax (CAT) aggregation rules (post 5 December 2001)
Aggregation rules for an inheritance or gift are those that apply at the date of death or the date of the gift. The valuation date, which determines the due date for CAT, is not relevant to aggregation rules.

To calculate the tax you owe on the latest benefit, add all inheritances or gifts you have received under the same group threshold from 5 December 2001 as follows:

  1. Identify the group threshold applicable to the current benefit.
  2. Add together the taxable value of all prior benefits received under this group threshold since 5 December 1991.
  3. Calculate the unused balance of the group threshold.
  4. Subtract this amount from the value of the current benefit.
  5. This is the excess amount you must pay tax on.
Example of Current CAT aggregation rules (post 5 December 2001)
Group threshold applicable to current benefit €30,150
Prior benefits in this group threshold €42,000
Unused threshold (€30,150 - €42,000) negative, so none
Current benefit €30,000
Amount you must pay tax on €30,000 x 33% = € 9,900
Click to expand...

Thanks for confirming that. I was concerned I would have to pay 33% on the whole £72,000 (less the current 30,150 threshold) whereas as you confirm its only 33% on the new inheritance as I used up by Group B allowance in 2003.

Who invented this system of thresholds anyway. Why not give everyone the same lifetime threshold for all gifts and inheritances irrespective of your relationship to the donor? It just seems to be an excuse for solicitors and accountants to make more money while penalising in effect the childless who see a greater proportion of their estate given over in tax in effect?

The argument you need a more generous system for 60 year old kids inheriting from their 85 year old parents (as most inheritances will be under Group A) seems a little odd. I accept thems the rules - but its still begs the question why?
 
You must log in or register to reply here.
Back
Top