TAOISEACH SIMON HARRIS has said changes to inheritance tax “deserve to be considered” in the run up to October’s budget.
Under the current rules, children are able to inherit €335,000 from their parents before they have to pay tax at 33%.
However, those in Fine Gael, such as Minister of State for financial services Neale Richmond, have argued for reforms and have highlighted that 13 years ago, a person could inherit €542,544 or be gifted that amount before paying tax at 22%.
When asked by The Journal today whether October’s budget will see changes to the tax, Harris said:
“I do think inheritance tax is a legitimate point for consideration in the budget because obviously it has a real impact on a son or daughter, nephew or niece trying to basically move into the family home.
“At a time when we’re trying to come up with a wide variety of housing solutions I do think we do need to be mindful of the fact that house prices have risen and inheritance tax hasn’t.”
With a €1.4 billion tax package announced as part of the Summer Economic Statement, Harris said there is a “limited pot” to play with.
He added that the issues around “unfairnesses” and “anomalies” with inheritance tax, as well as issues around inheriting farms needs to be considered.
He said the “overriding focus” within the tax package will be on income tax.
‘Hitting ordinary people’
His comments come after Tánaiste Micheál Martin said last week that inheritance tax “is hitting ordinary people”.
“It can create real difficulties for people in terms of if they’re inheriting their parents house and remember, the parents would have paid their tax throughout their lives,” he said.
Two years ago, there was outrage among those in Fine Gael and Fianna Fáil over the Commission on Taxation report recommending the tax-free threshold for inheritance tax should be lowered rather than increased.
Such a suggestion was batted away by Martin at the time, with the Tánaiste stating that he would have concerns about saying to people “‘you’ve worked all your life, you’ve bought your house, but no, actually, we want to take more off you when you die. And you can’t leave it to your family members’”.
Former Taoiseach Leo Varadkar also hit out at the report, stating that some of the recommendations were “straight out of the Sinn Féin manifesto”.
A Department of Finance document prepared ahead of last year’s budget found that increasing the amount before the tax kicks in to €340,000 would cost €5 million, while increasing it to €400,000 would cost in the region of €52 million.
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