From CAT thresholds and valuation dates to business relief and lifetime gifts, effective inheritance tax planning requires advisers to look beyond the will.

Inheritance tax planning is not simply about calculating the tax due when someone dies. For Irish accountants and tax advisers, the more valuable work often happens years before an inheritance arises.

With rising property and investment values, families can face significant Capital Acquisitions Tax (CAT) liabilities. Understanding how thresholds, exemptions, reliefs and the timing of transfers interact can make a substantial difference.

In a recent webinar, Mairead Hennessy of TaxKey examined the practical issues advisers should consider when helping clients transfer wealth.

Here are the key planning points.

1. Understand CAT thresholds and lifetime aggregation

Capital Acquisitions Tax applies to taxable gifts and inheritances received by beneficiaries in Ireland. The standard CAT rate discussed in the webinar was 33%.

The amount a beneficiary can receive tax-free depends on their relationship with the person making the gift or leaving the inheritance.

The webinar covered three relationship groups:

• Group A: Primarily children receiving gifts or inheritances from parents, with certain other qualifying relationships.
• Group B: Includes siblings, grandparents, nieces, nephews, aunts and uncles, subject to the relevant relationship rules.
• Group C: Generally applies to other beneficiaries, including friends, cousins and unmarried cohabitants.

The important point is that these are lifetime thresholds, not allowances that renew with each inheritance.

Previous taxable gifts and inheritances within the same threshold group must be considered when calculating the available balance.

For example, a client who previously received substantial gifts from a parent may have less Group A threshold available when they later inherit property.

Practical takeaway: Establish the beneficiary's gift and inheritance history before calculating the tax position. The current thresholds and their effective dates must also be confirmed.

2. Get the valuation date right

One of the most important technical points in the webinar was the distinction between the date of death and the valuation date.

For inheritances, the valuation date is not necessarily the date someone dies. It can depend on when the beneficiary becomes entitled to possession or when the relevant property is retained or delivered.

The date of the grant of probate is often relevant, but advisers should not assume it is always the correct date.

This matters because the valuation date affects:

• The value used in calculating the taxable benefit.
• The timing of CAT filing and payment obligations.
• The commencement of certain relief clawback periods.
• The supporting records required if Revenue queries the position.

Complex estates can also involve more than one valuation date.

Where property values change between death and the valuation date, the financial consequences can be material.

Practical takeaway: Identify and document the correct valuation date for each relevant inheritance rather than relying automatically on the date of death or probate.

3. Use lifetime gifts carefully

Lifetime gifting can be a useful element of inheritance tax planning, particularly where parents want to transfer wealth gradually.

The webinar highlighted Ireland's small gift exemption as one practical option.

Under the rules discussed, an individual may receive qualifying gifts of up to €3,000 per calendar year from each disponer without using their lifetime CAT group threshold.

This can be particularly useful when gifts are made consistently over several years.

However, advisers should pay attention to the records supporting these transfers.

The webinar also considered family loans, including situations where money is advanced without interest or at a below-market rate.

Such arrangements can create CAT issues because the benefit of interest-free or low-interest funding may itself constitute a gift.

A transaction described as a loan is not automatically treated as one for tax purposes.

Practical takeaway: Document gifts and loans properly, including the source of funds, terms of repayment and any interest arrangements.

4. Review agricultural and business relief before transferring assets

Agricultural relief and business relief are two significant areas of CAT planning.

Both can substantially reduce the taxable value of qualifying assets, but neither should be assumed to apply automatically.

Agricultural relief

Agricultural relief may reduce the taxable value of qualifying agricultural property by 90%, provided the relevant conditions are satisfied.

The webinar emphasised the importance of checking the beneficiary's circumstances, the agricultural property test and the requirements concerning farming or leasing arrangements.

Advisers also need to consider the conditions that continue after the transfer, including potential clawback provisions.

Business relief

Business relief may similarly reduce the taxable value of qualifying business property by 90%.

It can be relevant to transfers involving trading businesses, partnership interests and certain company shares.

However, not every asset held within a business necessarily qualifies.

The webinar specifically highlighted the treatment of surplus cash and investment assets. The purpose for which assets are held can affect the relief available.

For example, a trading company holding substantial cash reserves should not automatically be treated as having its entire value covered by business relief.

Practical takeaway: Review the composition of business assets and the conditions for relief before advising on a transfer. Identify any assets that may fall outside the qualifying value.

5. Consider whether trusts or family partnerships are appropriate

Trusts and family partnerships can feature in estate planning, but they serve different purposes.

Mairead explained that trusts may be useful where families need flexibility or greater control over how assets are managed and distributed.

However, trusts can also introduce additional tax liabilities and administrative obligations.

Discretionary trusts, in particular, can be subject to specific tax charges that need to be considered alongside CAT, CGT and ongoing administration.

Family partnerships offer a different approach.

They may be relevant where parents want to involve children in a family investment structure while making lifetime transfers.

For example, a family partnership may hold investments or property, with family members participating according to their respective partnership interests.

These structures require careful consideration of ownership, control, income allocation and the tax consequences of transferring assets.

Practical takeaway: Start with the family's objectives. A trust or partnership should address a genuine planning requirement rather than being adopted solely because it appears tax-efficient.

6. Don't overlook the CGT/CAT credit

One of the webinar's particularly useful planning points concerned the interaction between Capital Gains Tax (CGT) and CAT.

A lifetime gift of an appreciated asset may trigger CGT for the person making the transfer while also creating a CAT liability for the recipient.

In qualifying circumstances, a credit for CGT paid may be available against the CAT liability arising on the same event.

This can affect the overall tax cost of a lifetime transfer.

However, the sequence of gifts matters.

Where a beneficiary's CAT liability is covered entirely by their available threshold, there may be no CAT against which the CGT credit can be used.

Mairead therefore highlighted the importance of considering which assets are transferred first, particularly where a family intends to make several gifts over time.

The relevant conditions, including restrictions and potential clawbacks, must be examined before relying on the credit.

Practical takeaway: Model the combined CGT and CAT consequences of proposed lifetime gifts, rather than examining either tax in isolation.

7. Plan for how the inheritance tax will be paid

A technically sound inheritance tax plan also needs to address cash flow.

A beneficiary may inherit a valuable property or business interest without receiving sufficient cash to meet the resulting CAT liability.

This can create pressure to sell assets, obtain finance or restructure ownership.

Advisers should therefore consider the likely tax exposure alongside the liquidity available to the beneficiary.

This is particularly important where a family's wealth is concentrated in property, agricultural land or private businesses.

Practical takeaway: Include the funding of potential tax liabilities in estate planning discussions, not just the calculation of the liability.

The key message for advisers: start before the inheritance

Effective inheritance tax planning requires more than identifying a relief or calculating a threshold.

Advisers need to understand the family's objectives, previous transfers, asset values, available reliefs and potential liabilities across different taxes.

The strongest planning opportunities often arise when clients seek advice early enough to consider their options.

For accountants, that means treating inheritance tax planning as part of wider conversations about business succession, property ownership and intergenerational wealth transfers.

Frequently asked questions about inheritance tax planning in Ireland

1. What is the inheritance tax rate in Ireland?

Ireland's standard Capital Acquisitions Tax (CAT) rate is 33%, as discussed in the webinar. CAT applies to the taxable value of gifts and inheritances exceeding the beneficiary's available tax-free threshold, after accounting for relevant exemptions and reliefs. The amount payable depends on the beneficiary's relationship with the disponer, their previous taxable benefits and the value received. Advisers should calculate the beneficiary's cumulative position rather than treating each inheritance as a separate tax-free event.

2. How much can a child inherit tax-free from their parents in Ireland?

A child may receive gifts and inheritances within the Group A lifetime threshold without incurring CAT, subject to the applicable rules. The webinar discussed an increase to €420,000, but the amount and effective date require confirmation before publication. Importantly, the threshold is generally shared across qualifying benefits received from both parents. Previous gifts and inheritances in the same threshold group can reduce the remaining allowance. Advisers should review the beneficiary's historical benefits before determining how much threshold remains available.

3. Can parents give children money without paying inheritance tax?

Parents can make qualifying gifts to children using the annual small gift exemption. The webinar discussed an exemption of €3,000 per disponer, per recipient, per calendar year. Gifts within this exemption do not reduce the recipient's lifetime CAT threshold. Larger gifts may also fall within the available Group A threshold, although they can reduce the amount available for future gifts or inheritances. Records should clearly establish the donor, recipient, date and value of each gift.

4. What is the difference between agricultural relief and business relief?

Agricultural relief and business relief are separate CAT reliefs that may each reduce the taxable value of qualifying assets by 90%. Agricultural relief focuses on qualifying agricultural property and includes conditions relating to the beneficiary and the use of the property. Business relief concerns qualifying business property, subject to ownership, trading and asset-related conditions. Neither applies automatically. Advisers should establish the nature of the assets, the qualifying conditions and any continuing obligations before claiming relief.

5. Are trusts a good way to reduce inheritance tax in Ireland?

Trusts can be useful for estate planning, but they do not automatically reduce inheritance tax. Their suitability depends on the family's objectives, the beneficiaries' circumstances and the type of trust involved. Discretionary trusts can introduce additional tax charges, alongside administration and compliance responsibilities. A trust may be appropriate where flexibility or control over future distributions is important. Advisers should compare the full tax and practical implications with alternative structures before recommending one.

6. Can Capital Gains Tax be offset against inheritance tax in Ireland?

A CGT credit may be available against CAT where both taxes arise on the same qualifying transfer. This is particularly relevant to lifetime gifts of assets that have increased in value. The credit is subject to statutory conditions and restrictions, and it cannot simply be applied to unrelated tax liabilities. The timing and order of transfers can influence whether the credit provides a benefit. Advisers should assess the combined CGT and CAT position before completing a gift.

Explore the Webinar

For a more detailed discussion of these planning issues, including valuation dates, lifetime gifting, agricultural and business relief, trusts, family partnerships and the CGT/CAT credit, see the CPDStore session presented by Mairead Hennessy.

Inheritance Tax Planning Issues for Advisers and Their Clients – October 2026

The contents of this article are meant as a guide only and are not a substitute for professional advice. The authors accept no responsibility for any action taken, or refrained from, as a result of the material contained in this document. Specific advice should be obtained before acting or refraining from acting, in connection with the matters dealt with in this article.