The exchequer reported an all time high collection from the inheritance tax which is one component in the capital acquisition tax (CAT). The amount recorded that was collected amounts to €466.3 million. The increase in revenue from the inheritance tax is due to increasing property prices and unchanged tax free thresholds. The revenue figure of inheritance tax collected depicts an increase in revenue by 10% in comparison to the collections in 2017. Inheritance tax collections comparatively increased by 48% in comparison to the Celtic Tiger era in 2007. This dramatic increase across the span of 10 years is due to the rising housing costs.
Over half of the inheritance tax was paid on the behalf of grandchildren, nieces and nephews who inherited upwards of €32,500 from relatives in 2018. The rapid growth in inheritance tax collection is due to another year of increasing property prices. Furthermore, the increase is due to the controversial unchanged tax free thresholds. Many people argue that these thresholds should be immensely increased. The tax free threshold for inheritances left to children was at its highest in 2009 amounting to € 542,544.
The government claims it wants to increase the category A threshold to €500,000 over time, however changes remain minimal. This threshold refers to parent to child asset transfers. The 2018 budget increased the lifetime amount a child can obtain through an inheritance during their parents lifetimes by only €10,000 amounting to an overall € 320,000.
Increasing the threshold will allow fewer people to be required to pay the tax when receiving an inheritance or gift. The greater the threshold, the fewer individuals subject to tax and the lower amount of tax will be paid.
Currently, Ireland has a lower threshold for the inheritance tax in comparison to the last few years. According to figures shown by the Irish Times, the number of those with taxed inheritance levied at a rate of 33% is on the rise by 5%. The number of individuals faced with the burden of the inheritance tax has reached an all time high of 15,060. The average amount of tax paid was €30,964, but likely to be higher for those residing in Dublin. Individuals in Dublin accounted for 44% of all who payed inheritance tax in 2017. In Dublin, the average tax payment was €35,423 in comparison to the national average of €29,776.