Ireland's Inheritance Tax: What Budget 2027 Could Change
Budget Day is just weeks away, on 6th October 2026. With house prices high and more families facing tax on an inheritance they thought would be straightforward, possible changes to Ireland’s Capital Acquisitions Tax rules matter. The Government may raise thresholds, but no change is guaranteed. Understanding your position now gives you time to make sensible decisions rather than rushing after the Budget.
What is inheritance tax in Ireland?
In Ireland, what many people call inheritance tax is usually Capital Acquisitions Tax, or CAT. It applies to gifts and inheritances. Once the value you receive goes above your relevant tax-free threshold, CAT is charged at 33% on the excess.
The important point is that the threshold is a lifetime limit. Revenue adds together gifts and inheritances you have received from people in the same relationship group. It is not a fresh allowance for every separate event. A gift received years ago can therefore affect the tax due on an inheritance today.
The current CAT thresholds
The thresholds in force for 2026 are:
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Group A: €400,000 where the beneficiary is a child of the person giving the gift or leaving the inheritance. This includes stepchildren and adopted children.
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Group B: €40,000 for relationships such as siblings, nieces, nephews, grandchildren and grandparents.
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Group C: €20,000 for everyone else, including an unmarried partner who is not a spouse or civil partner.
The Group A threshold rose from €335,000 to €400,000 following Budget 2025, taking effect on 2nd October 2024. Budget 2026, delivered in October 2025, made no changes to CAT thresholds. That was a significant increase, but it does not mean every family inheritance will fall below the limit.
Why ordinary families are feeling the pressure
Irish house prices have risen sharply. An ordinary family home in Dublin, Meath or Kildare, combined with savings or other assets, can easily exceed the €400,000 Group A threshold. The beneficiary may then face a 33% bill on the amount above the available lifetime threshold.
That bill can be difficult to fund when the inheritance is mainly a house. In the worst case, the beneficiary may have to sell the family home to pay the tax. This is not just an issue for wealthy estates; it is increasingly a practical concern for families who bought a home many years ago.
Unmarried couples need particular care. A partner who is not married or in a civil partnership generally falls into Group C, with only €20,000 tax-free. That can produce a very different result from the one a couple expects. Our guide to tax for unmarried couples explains why this deserves attention well before an illness or death.
What could Budget 2027 change?
Finance Minister Simon Harris has signalled that he wants to move the Group A threshold towards €500,000. He has described the current system as “punitive and difficult at times”. Taoiseach Micheál Martin has also raised concerns, particularly for people without children who want to leave assets to nieces, nephews or other loved ones.
Fine Gael’s manifesto proposed a €500,000 Group A threshold, €75,000 for Group B and €50,000 for Group C. However, wider reforms for non-children are reportedly on hold because of their cost, even though they remain a live issue. Raising Group A alone to €500,000 would cost the Exchequer €86.6 million, according to Mr Harris’s own figures.
There is no promise that any of these changes will happen on 6th October. The Government made no CAT changes in Budget 2026 despite similar expectations. CAT receipts have risen sharply: net CAT receipts were €854 million in 2024 and rose to €1.12 billion in 2025. That revenue pressure helps explain why reform is being discussed carefully.
Planning steps to consider before Budget Day
A review now can help you prepare for either outcome. Consider the following practical steps:
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Use the small gift exemption. Each person can give up to €3,000 per year to any individual without CAT, and it does not reduce the lifetime threshold. A couple can therefore give €6,000 each year to a child with no CAT implications.
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Think about timing. Spreading gifts over a number of years, rather than leaving everything in an estate, can reduce the overall CAT bill significantly. It also lets you use annual exemptions and plan around each beneficiary’s remaining threshold.
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Consider a section 72 life-assurance policy. A qualifying policy taken out specifically to pay inheritance CAT can provide funds for the bill without a further CAT charge on those proceeds, provided the money is used to pay the CAT liability. Strict statutory conditions apply, so take specialist advice before arranging one. The policy needs careful design, so take advice before arranging it.
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Check reliefs for farms and businesses. Agricultural relief and business relief can reduce CAT by 90% for qualifying assets, but strict conditions apply. The beneficiary may need to keep the asset and meet ownership or use requirements.
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Map the full family picture. List earlier gifts, expected inheritances, property values, pensions and other assets. Aggregation rules can be complex, especially where several gifts come from the same group.
You can read more about the small gift exemption before making decisions. A tax accountant can check the detail and help you avoid an arrangement that creates an unexpected liability.
Why planning now makes sense
Waiting for the Budget may feel logical, but it can leave too little time to act. If the thresholds rise after 6th October, you will be in a better position to benefit if you already understand your assets and beneficiaries. If they do not rise, you will still have a clear plan and more time to fund or manage the CAT bill.
This is especially important where a home, farm or trading business is involved. Transfers may have legal, valuation and tax consequences beyond CAT. Good advice is about more than finding a threshold: it is about making sure the plan works for the people who will have to live with it.
A practical next step
Budget 2027 may bring welcome changes, but families should not base an estate plan on a proposal. Review your position before Budget Day, gather details of previous gifts and consider how a future tax bill would be paid. To discuss your circumstances with a Dublin accountancy team, get in touch with Bond & Co. before 6th October.