Capital Acquisitions Tax Ireland: Thresholds, Rates, and Who Pays

When someone dies in Ireland, the state's share of any inheritance does not come out of the estate before it is distributed. It lands with the person receiving it. Understanding exactly who pays Capital Acquisitions Tax in Ireland, how much, and by when is one of the most critical pieces of knowledge for any beneficiary — and any executor who wants to avoid being personally liable for a beneficiary's unpaid tax bill.

Capital Acquisitions Tax Is Not an Estate Tax

This is the most common point of confusion. Countries like the United States levy an estate tax, where the tax is settled from the estate's assets before any distribution occurs. Ireland operates differently. Capital Acquisitions Tax (CAT) is charged on the beneficiary — the person who receives the inheritance, not on the estate itself.

The practical implication: the executor can distribute the estate, but if a beneficiary receives an inheritance that pushes them above their lifetime threshold and fails to file and pay the CAT, Revenue will come after that individual, not the estate. This is why executors are strongly advised to obtain a letter of tax clearance from Revenue before distributing, and why beneficiaries should not assume their inheritance is clean of tax until they have checked.

The 2026 CAT Group Thresholds

How much inheritance tax you pay in Ireland depends entirely on your relationship to the person who died. Revenue uses three groups, each with its own lifetime threshold. The thresholds apply to all gifts and inheritances you have received from people in that group since 5 December 1991 — it is a cumulative lifetime figure, not per death.

Group A — €400,000 Children (including stepchildren and adopted children) inheriting from a parent. Also applies to a minor grandchild inheriting from a grandparent where the child's parent (the grandparent's child) is deceased.

Group B — €40,000 Close relatives: siblings, grandchildren, nephews, nieces, and lineal ancestors and descendants not covered by Group A.

Group C — €20,000 Everyone else — distant relatives, friends, unmarried partners who do not qualify under any other exemption, and strangers.

Amounts received above the threshold are taxed at a flat rate of 33%.

Worked example: A child inherits €450,000 from a parent. The first €400,000 is within the Group A threshold and tax-free. The remaining €50,000 is taxed at 33%, giving a CAT bill of €16,500.

Worked example: A niece inherits €60,000 from an aunt. The first €40,000 is within the Group B threshold. The remaining €20,000 is taxed at 33%, giving a CAT bill of €6,600.

Who Pays Inheritance Tax in Ireland

The beneficiary — the person who receives the inheritance — is legally responsible for filing the Form IT38 and paying any CAT owed. The executor does not pay this tax from the estate (unless the will specifically directs the estate to pay it, which is unusual).

There is, however, a critical risk for executors. If an executor distributes assets to beneficiaries before ensuring the beneficiaries have met their CAT obligations, and those beneficiaries then fail to pay Revenue, the executor can be held personally liable. This is not a theoretical risk — Revenue actively pursues it.

The practical safeguard is to obtain a letter of tax clearance from Revenue before making the final distribution. You apply via the MyEnquiries portal. Revenue typically processes this within 35 working days. Only distribute the residual estate once you hold that clearance letter.

Exemptions and Reliefs That Reduce or Eliminate CAT

Several important exemptions apply:

Spouse and civil partner exemption: Inheritances passing between legally married spouses or civil partners are completely exempt from CAT, regardless of value. There is no threshold limit for this exemption.

Dwelling house exemption: A beneficiary who has lived in the deceased's home continuously for at least three years before the date of death, who does not own another residential property, and who continues to live in the home for six years after the inheritance, can inherit the property free of CAT. The conditions are strict and the six-year retention requirement is often overlooked.

Agricultural relief and business relief: Where the inherited asset is a qualifying farm or business, relief can reduce the taxable value by 90%, significantly reducing or eliminating the CAT liability. These reliefs have complex eligibility conditions.

Small gift exemption: The first €3,000 of gifts received from any one person in a calendar year is exempt. This is a gift exemption, not specific to inheritance, but it reduces the taxable amount applied against the lifetime threshold.

The IT38 Filing Deadline and the Valuation Date Rule

The deadline for filing the Form IT38 and paying any CAT owed is 31 October. But which October depends on the valuation date — and this is where most beneficiaries make mistakes.

The valuation date is not the date of death. For an inheritance received under a will, the valuation date is the earliest of: the date the executor formally assents to the inheritance, the date it is actually transferred, or twelve months after the death (the end of the executor's year).

If the valuation date falls between 1 January and 31 August: The pay-and-file deadline is 31 October of that same year.

If the valuation date falls between 1 September and 31 December: The deadline is 31 October of the following year.

This means an inheritance with a valuation date of September would give you more than thirteen months to file and pay, while an inheritance with a valuation date of July gives you only three months.

The threshold for being required to file is 80% of the applicable group threshold. If your total inheritances from Group A sources have accumulated to €320,000 or more (80% of €400,000), you must file an IT38 return even if no tax is due. Missing this filing threshold — not just missing the payment — incurs penalties.

How This Affects the Estate Administration Timeline

Executors need to factor CAT into the distribution timeline. A common mistake is completing the probate process, obtaining the Grant of Representation, and distributing the estate promptly — without considering whether beneficiaries have outstanding CAT obligations or whether the valuation date creates a filing window that falls before the executor has even finished.

Best practice is to:

1. Identify each beneficiary's relationship to the deceased (to determine their CAT group and threshold).
2. Ask each beneficiary about previous inheritances from people in the same group since 1991 (to check cumulative threshold position).
3. Obtain Revenue tax clearance before distributing the residual estate.
4. Not distribute any asset that may trigger a CAT liability until you have confirmed the beneficiary is aware of and prepared to meet that obligation.

The When Someone Dies in Ireland — Estate Settlement Guide covers the executor's full tax compliance sequence — including the final income tax return for the deceased, the estate income tax return, the Revenue tax clearance letter process, and the CAT obligations that arise at distribution. If you are administering an Irish estate and need to understand where your liability begins and ends, that is the place to start.

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