391. Deputy Michael Cahill asked the Minister for Finance to consider as a solution to the capital acquisition tax issue (inheritance) to classify the next-of-kin (details supplied) to be automatically promoted to ‘child status’ when it arises; the estimated cost of such a measure in view of the obvious discrimination given the drop from €400 thousand to €40 thousand in the allowance is incredibly big; and if he will make a statement on the matter. [61738/25]

CAT is a beneficiary-based tax on gifts and inheritances that is payable on the value of the property received. For CAT purposes, the relationship between the person giving a gift or inheritance (i.e. the disponer) and the person who receives it (i.e. the beneficiary) determines the maximum amount, known as the “Group threshold”, below which CAT does not arise. There are three Group thresholds:

- the Group A threshold (currently €400,000) applies where the beneficiary is a child of the person giving the gift or inheritance

- the Group B threshold (currently €40,000) applies where the beneficiary is a brother, sister, nephew, niece, lineal ancestor or lineal descendant of the person giving the gift or inheritance

- the Group C threshold (currently €20,000) applies in all other cases.

My officials have examined Capital Acquisitions Tax as part of the annual Tax Strategy Group exercise. The resultant papers outlined the tax policy considerations for the Government and the options available to it in forming this year’s Budget.

The Deputy is proposing that a "next of kin" beneficiary could be nominated if a disponer is without children and is asking for the costs associated with the proposal. This essentially would uplift some Group B beneficiaries to €400,000. Revenue estimated a cost of uplifting Threshold B of approximately €305 million. However, due to difficulties in costing the combining of Thresholds A and B, and the fact that the proposal by the Deputy would not uplift all Group B beneficiaries to Group A, the true cost may be lower, however this cannot be demonstrated at this time.

A link to this year’s paper on Capital Taxes can be found here www.gov.ie/en/department-of-finance/collections/budget-2026-tax-strategy-group-papers/.

Finally, it is important to be aware that the options available for setting CAT thresholds must be balanced against competing demands, and as part of the annual Budget and Finance Bill process.