Donohoe is urged to ease tax pressure on bereaved

Bill after death of parents can be ‘devastating’


Finance Minister Paschal Donohoe. Photo: Steve Humphreys
Finance Minister Paschal Donohoe. Photo: Steve Humphreys

Minister for Finance Paschal Donohoe is coming under intense pressure from his Fine Gael colleagues to reduce the burden of inheritance tax on bereaved families in the forthcoming Budget.

Fine Gael ministers and backbench TDs are demanding that Mr Donohoe fulfils a commitment to increase the threshold for paying inheritance tax to €500,000, as is set out in the Programme for Government.

The Government increased the capital acquisitions tax (CAT) threshold from €280,000 to €310,000 in 2017 but made no changes in last year’s budget.

This means children do not have to pay any tax on inheritance worth up to €310,000 left to them by their parents.

Fine Gael TDs, especially those based in Dublin, are coming under pressure from constituents to fulfil the promise made by the party on forming the minority Government.

Oireachtas Budgetary Oversight Committee chairman Colm Brophy said he would like to see the cost of inheritance tax addressed in October’s Budget. Mr Brophy told the Sunday Independent he expects his committee to examine proposals on inheritance tax before the Budget.

“My personal view is that I would like to see us raise inheritance tax threshold,” he said.

“It is an area that should be looked at because a number of families, and particularly single-child families, can get caught in a situation where a family home has to be sold over fears they will get lumped with the taxes. We need to be imaginative.”

Dublin Bay South TD Kate O’Connell also said people going through a bereavement are being forced to sell their family homes to pay tax bills.

“There is a commitment in the Programme for Government that we would raise the threshold of inheritance tax to €500,000, and I hope that this is the Budget we can finally deliver on that,” Ms O’Connell told the Sunday Independent.

“Children inheriting their family home can currently face the responsibility of paying an insurmountable tax bill, which [coupled with the death of their parents] can be devastating.

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“Many people simply cannot afford it and are forced to sell the family home to pay the inheritance tax bill, potentially to buyers who have no interest in living in the home, who have no connection to the area or who may decide to use it for short-term holiday rentals at a huge profit.

“The bereaved child then has to try find somewhere else to live, with what little may be left over from the sale of their family home,” he added.

At least one Fine Gael minister is understood to have personally raised the issue of inheritance tax directly with Mr Donohoe.

The Programme for Government states that the current administration will “work with the Oireachtas to raise the band A capital acquisitions tax threshold (including all gifts and inheritances from parents to their children) to €500,000”.

Before the recession, a parent could leave €542,000 to each child without tax applying. However, this was reduced to €225,000 by 2012 as part of a raft of revenue- raising austerity measures.

The current band A €310,000 threshold applies to all children including an adopted child, step-child and also certain foster children.

A brother, sister, niece, nephew or lineal ancestor of deceased person has to start paying capital acquisitions tax on anything they have been left by a relative which is worth more than €32,500.

Sunday Independent

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