I thank the Minister of State, Deputy Troy, for coming to the House to discuss this important issue. I am asking him to make a statement on the issue of inheritance tax.

When a parent dies, he or she can leave up to €400,000 to any of his or her children. For those who are married but who may not have children, however, the threshold from sibling to sibling is €40,000. Many people who do not have children feel very disenfranchised in that they feel they have paid their taxes. Whoever they are going to leave their inheritance to is often put to the pin of their collar to pay the inheritance tax. Many people end up having to sell the family home or shares, for example, just to pay the tax due.

An issue also arises where couples who are not married buy a house together. If, before getting married or where there is no marriage, one partner dies, the other can inherit only €20,000. In many cases, the surviving partner might have to sell the house that they bought together just to pay the inheritance tax.

There seems to be a huge anomaly in this regard. It is very unfair that someone who has paid their taxes and wishes to leave what they have to a loved one, be it a relative, niece, nephew, cousin or other individual, is disenfranchised.

I would love to hear what the Minister of State has to say about it, and if a review is being carried out in this whole area. It is an issue we need to look at seriously.

I thank the Senator for raising this matter. It is quite popular currently, largely due to the work of the end tax discrimination group. The group is contacting us all and I acknowledge that it is doing great advocacy work, as the Senator is herself. She has raised this before in the Seanad.

The capital acquisitions tax, CAT, is a beneficiary-orientated tax that is payable by the recipient of a gift or inheritance as opposed to the person providing that gift or inheritance. CAT plays an important role in ensuring that we maintain a broad tax base and raised €854 million in 2024 and €1.12 billion in 2025, so it is not an insignificant sum of money.

For CAT purposes, the relationship between the person giving the gift or inheritance and the person receiving it determines the maximum amount, known as the group threshold, below which CAT does not arise. The Finance Act 2024 increased each threshold by approximately 20%, with an estimated cost of €88 million. The group A threshold, which in general applies where the beneficiary is a child of the disponer, increased to €400,000 from €335,000. It is useful to note that the definition of "children" for capital acquisitions tax purposes includes any stepchildren, adopted children or certain foster children. All can avail of the group A threshold in respect of gifts and inheritance received from the disponer. The group B threshold increased to €40,000 from €32,500. This threshold applies where the beneficiary is a brother, sister, nephew, niece or linear ancestor or descendant such as a grandchild of the disponer. The group C threshold increased to €20,000 from €16,250, with this threshold applying in all other cases.

It should be borne in mind that where a person receives a gift or inheritance that is in excess of the relevant tax-free threshold, CAT at a rate of 33% applies on all excess benefits.

It is important to be aware that there are significant costs associated with increasing the existing thresholds. For instance, an increase in threshold A to €500,000 would cost in the region of €86.6 million, while an increase in threshold B to €60,000 would cost approximately €70 million. In relation to the idea of combining thresholds A and B and bringing relatives such as nephews, nieces, brothers and sisters within the scope of the higher threshold, the Senator should note that Department of Finance officials reviewed this matter last year in the CAT tax strategy group paper. As part of this exercise, Revenue estimated that the cost of merging groups A and B to be in the region of €305 million. These costs have been updated recently, and it is estimated that such a change could now cost in the region of €350 million. It is fair to say this is a significant sum of money, and while I appreciate the Senator's sentiment toward the issue, it is not an easy undertaking from a budgetary perspective.

The tax strategy group paper was published in advance of the budget and is the best means of considering issues such as inheritance tax in an analytical and transparent way. The group is not a decision-making body and the papers produced by the Department of Finance are simply a list of options and issues to be considered in the budgetary process. Officials included a further update on this matter in this year’s tax strategy group papers, which will be published shortly.

I assure the Senator that the Tánaiste is conscious of the burden of capital taxation and continues to engage with his officials on these matters. He also met with the End Discrimination in Inheritance Tax group and I understand that further engagement with it is going to take place. As with all taxation matters, this will form part of the budgetary consideration, which has started for next year's budget. I welcome that there is updated data in the tax strategy group's papers this year that will help inform the decisions and considerations that the Tánaiste and the wider Government will have to make in advance of the upcoming budget.

Before the Senator's response, I welcome the Meath opportunities for training, MOT, group from Navan, County Meath, and Ashbourne Women's Shed to the Public Gallery. I understand that they are guests of Deputy O'Rourke. They are welcome and I hope they have a lovely day.

I thank the Minister of State for his response. I understand that a significant amount of money comes from the inheritance tax. It is almost like a form or double taxation. The people who earn the money have already paid tax on it, and now the person who is going to inherit it has to pay tax on top of it again. While I understand that a change would cost a lot of money, I pay tribute to the End Discrimination in Inheritance Tax group, which has been thorough in setting out the issues that people, especially childless couples, are facing and the predicament they are in. I am glad to note that figures will be published shortly, and I will be looking at them carefully. I understand that there has to be a balanced budget, but tax has been paid on this money already and that is something that really needs to be looked at. I think we need to do some sort of major reform in that area, and I would appreciate if the Minister of State would take that message back to the Department.

The Senator can be guaranteed that I will bring her message back loud and clear. I have no doubt that she is using her own offices and her direct contact with the senior Minister in the Department to make her views known. As I have said, €350 million is a significant amount of money. I am sure the Senator has been in Buswells many days in the past few weeks when various advocacy groups are coming to put forward proposals on the need for additional resources to keep critical services going and to support people in our communities.

The Senator is right. People who are leaving money in a will have worked hard to accumulate that money. They have paid taxes on their work. They have done the right thing and put money away, but it is not they who are paying the tax. It is the beneficiary who is paying the tax, and that is a bit of a difference. At a time when the Tánaiste and I are advocating that people take out a new investment account and are encouraging them to invest and save their money in a different way from next year, there is maybe a recognition and a timeframe that something can be done in this area. Maybe it is for a special niece or nephew and to acknowledge people who are childless. However, to be fair, there are many families where nieces and nephews would maybe need introductions to some of their aunts and uncles.

Maybe we have to be imaginative in how we do it. The critical thing is that the tax strategy group papers are going to give updated information. That data will help to inform the Tánaiste in his consideration before any decision is taken at a wider Government level.

I will certainly relay back to him the strong message the Senator has raised with me this morning.

I thank the Minister of State for his personal interest in the area.