Budget 2012 has significantly reduced Group A thresholds and increased tax rate.

With the announcement of the new measures contained in Budget 2012, we all now have an idea what the current year holds for us.

One change in the Budget that was relatively unreported was the adjustments to Capital Acquisitions Tax (CAT). CAT is payable to the Revenue Commissioners where someone receives an inheritance and they exceed their tax free allowance at the time. The tax rate at which CAT is charged has increased over the last number of years whilst the tax free allowances have been reduced at the same time, essentially a double hit.

In 2010, the tax rate at which CAT was charged was 25%, this has been increased to 30% in the Budget. This means that you have to pay 30% tax to the Revenue Commissioners on any inheritance over your tax free allowance.

There has also been a significant change in the tax free allowances for persons in the Group A threshold. People in Group A would include children of a deceased parent or deceased children to parent in certain circumstances.

In 2010, the tax free allowance for people in Group A was €332,084 which meant you could take amount tax free and pay 25% tax on anything above that.

Budget 2012 has reduced the tax free allowance for people in Group A to €250,000, a reduction of €82,084. This is a considerable reduction but you now also have to pay tax at a higher rate of 30% on any inheritance above this new threshold.

In some situations with the benefit of legal advice, it is possible to structure your Will in such a way to ensure the least amount of Capital Acquisitions Tax is payable to the Revenue Commissioners. Irwin Solicitors have many years experience advising clients how to best structure their Wills. Contact us on 01-2849034 or email us on This e-mail address is being protected from spambots. You need JavaScript enabled to view it .