191. Deputy Maeve O'Connell asked the Tánaiste and Minister for Finance if his Department will consider reforming the inheritance tax category system. [39606/26]

210. Deputy Michael Cahill asked the Tánaiste and Minister for Finance to reduce inheritance tax that is charged at a flat rate of 33% on the value of assets exceeding specific, relationship-based tax-free thresholds, and to significantly increase these thresholds of €400,000 in the case of a son or daughter and €40,000 in the case of a niece or nephew; and if he will make a statement on the matter. [39404/26]

I propose to take Questions Nos. 191 and 210 together.

Capital Acquisitions Tax (CAT) is a tax which applies to both gifts and inheritances and is charged at a rate of 33%. For CAT purposes, the relationship between the person giving a gift or inheritance and the person who receives it determines the maximum amount, known as the “Group threshold”, below which CAT does not arise. The group thresholds were most recently increased in Budget 2025 as follows:

The Group A threshold increased to €400,000 from €335,000. This threshold applies where the beneficiary is a child of the disponer. This includes adopted children, stepchildren and some foster children. Parents may also fall within this threshold where they take an inheritance from a child.

The Group B threshold increased to €40,000 from €32,500. This threshold applies where the beneficiary is a brother, sister, niece, nephew, or lineal ancestor or lineal descendant of the disponer. Following recent changes made to Capital Acquisitions Tax legislation, the Group B threshold also applies to persons who receive gifts and inheritances from the wider family of their foster parents, for example, from their foster siblings, uncles, aunts and grandparents.

The Group C threshold increased to €20,000 from €16,250, with this threshold applying in all other cases.

Along with tax free group thresholds, various reliefs and exemptions are available in relation to CAT, including agricultural and business relief. There is also the small gift exemption, favourite niece or nephew relief, and the dwelling house exemption.

In general, the availability of specific reliefs in respect of a particular tax head often means that the tax must be calibrated at a particular level in order to generate an appropriate yield. It is important from a tax policy perspective to maintain stability and certainty, and to ensure that the CAT thresholds are appropriately set in the context of the range of reliefs available.

There is a significant associated cost with further changes to the group thresholds, whether it involves increasing these thresholds or whether it involves reforming the inheritance tax category system in order to bring those who are childless within the scope of the Group A threshold. However, that said I recognise the burden of capital taxation.

In conclusion, any further changes to the CAT rate and thresholds and who falls within these thresholds must be considered among various other demands within the overall Budget package, as they have been in the past. In that regard, you should note that the CAT group thresholds are kept under review annually by my officials throughout the Finance Bill cycle.