Adult ministers advocate for modifications to the inheritance tax structure, benefiting childless grownups.
Independent Ministers Michael Healy-Rae and Marian Harkin have brought the issue of Ireland's inheritance tax system to the attention of Minister for Finance Paschal Donohoe. The capital acquisitions tax (CAT) regime, which governs inheritance tax in Ireland, is currently under scrutiny due to concerns raised by the campaign group Edit and the Independent Ministers themselves.
The CAT regime is a topic of concern for Edit, who have raised concerns about its fairness. They argue that adults without children face disproportionately high tax burdens when inheriting estates. In response, proposals for reforms have been put forward, including allowing people to inherit a home tax-free and replacing the existing thresholds with an across-the-board 10% tax rate. These proposals aim to modernize the inheritance tax rules and reduce the financial impact on these beneficiaries.
Healy-Rae and Harkin have been advocating for these changes, seeking a fairer inheritance tax system for people who do not have children to inherit their estate in the usual manner. Their proposals have been met with a cautious response from Minister for Finance Paschal Donohoe. While he has acknowledged the calls for change, he has not yet committed to immediate reforms. Instead, he emphasises the government's focus on maintaining a balanced tax system that preserves revenues while considering fairness and economic impacts.
There is no indication that Donohoe has agreed to abolish thresholds or enact the proposed flat 10% tax rate, signalling a measured approach to any potential changes. However, draft legislation published recently proposes a significant shift starting in 2027, where unused pension funds will become subject to inheritance tax, ending their previous exemption. This change will affect estate planning strategies but is part of a broader reform and is separate from the proposals specifically targeting beneficiaries without children.
In summary, Independent Ministers Healy-Rae and Harkin have proposed reforms including tax-free inheritance of homes and a flat 10% rate replacing thresholds for estates of people without children. Minister Paschal Donohoe has responded cautiously, emphasising the need to balance tax revenue and fairness, without committing to these proposals yet. Broader inheritance tax reforms are underway, such as including pensions in the tax base from 2027, which will affect many estates but is not directly related to the childless inheritance issue. The CAT regime is currently under discussion between Independent Ministers and Minister for Finance Paschal Donohoe, with the campaign group Edit criticising it as "grossly unfair".
Business and finance are at the heart of the ongoing discussion regarding Ireland's inheritance tax system, with Independent Ministers Healy-Rae and Harkin advocating for reforms that aim to provide a fairer tax environment for people who do not have children. These proposals, such as allowing people to inherit a home tax-free and replacing the existing thresholds with a flat 10% tax rate, are aimed at modernizing the inheritance tax rules and reducing the financial impact on these beneficiaries.
