Irish CAT Prior Benefits ?

[Bytesize]

Hi. I have a question concerning the use of prior benefits when calculating CAT tax liabilities.

My mother (UK citizen) is due an inheritance from her brother (Irish citizen) who passed away recently. I understand for CAT she would be part of the Group B threshold which is 32,500 euros.

However, in 2019 she also received an inheritance from her sister who was also a UK citizen, which just exceeded the 32,500 euro threshold.

So, my question is, does any UK inheritance received by my mother count against the Irish CAT threshold. i.e. she will need to pay CAT tax liability for the whole of her brothers inheritance as any UK inheritance is also classed as a prior benefit for CAT?

Many thanks, Paul.

 

[jpd]

Unfortunately, yes

 

[AAAContributor]

My mother (UK citizen) is due an inheritance from her brother (Irish citizen) who passed away recently. I understand for CAT she would be part of the Group B threshold which is 32,500 euros.

The word 'citizen' is not particularly helpful so let's ditch the term for the purposes of this discussion.

If your mother's brother (the disponer) was tax resident* in Ireland, then the inheritance is within scope of Irish tax (i.e. CAT) and the Group B Threshold would apply based on the relationship.

However, in 2019 she also received an inheritance from her sister who was also a UK citizen, which just exceeded the 32,500 euro threshold.

So, my question is, does any UK inheritance received by my mother count against the Irish CAT threshold. i.e. she will need to pay CAT tax liability for the whole of her brothers inheritance as any UK inheritance is also classed as a prior benefit for CAT?

More information is required in order to answer this.

Was the 2019 inheritance within scope of Irish tax in the first place?

If your mother was tax resident* in the UK, her sister was tax resident* in the UK, and the property under the inheritance from her sister was not situate in Ireland, then this was not a taxable inheritance in Ireland and outside the scope of Irish CAT i.e. Ireland has no business taxing such an event.

In accounting for any Irish tax on the recent inheritance from her brother, your mother will need to include the 'taxable value of aggregable prior benefits'. If the 2019 inheritance from her sister was not within scope of Irish tax and therefore not a taxable benefit, in my view it should not count against the Irish CAT Group Threshold and so the threshold should be available to her on the inheritance from her brother. If the 2019 inheritance was within scope of Irish tax, then it appears that there would be no Group B Threshold remaining to set against the value of the most recent inheritance.

I suspect from the way you have phrased your post and my reading of it, is that the 2019 inheritance was not within scope of Irish tax and that no IT38 (CAT return) was made (and it might have been just a coincidence that the amount was close to €32,500). Please correct this if my hunch is wrong. If you could provide more details in relation to the 2019 inheritance, it will help respondents give an informed reply.

* or ordinarily resident

 

[Bytesize]

Hi

Many thanks for the quick replies.

Sorry, yes, the use of "citizen" can make this more ambiguous!

Just for clarity (I hope!). Both my mother & her sister who she received an inheritance from in 2019 were both born in Ireland but moved to the UK when they were 17 years old and remained in the UK. (UK residents).

My mothers sisters estate would have been subjet to UK IHT but as it was below the UK IHT threshold, no tax was due. No IT38 (CAT return) was submitted as her estate was solely within the UK and both UK residents.

The actual inheritance from her sister back in 2019 was actually £36,000 sterling which would exceed the Group B €32,500 threshold if this needs to be included as prior benefits for CAT purposes.

Many thanks, Paul.

 

[AAAContributor]

My mothers sisters estate would have been subjet to UK IHT but as it was below the UK IHT threshold, no tax was due. No IT38 (CAT return) was submitted as her estate was solely within the UK and both UK residents.

Based on your update, the Group B Threshold should be intact and fully available to apply against your mother's inheritance from her brother.

The 2019 inheritance is not a "prior benefit" that has to be accounted for.