A gift or inheritance from a spouse is not liable to inheritance tax. This will only apply to a legal spouse and to divorced persons in certain circumstances. A “cohabitant” or “partner” in the general meaning (i.e. not a “civil partner”) is treated as a stranger for tax purposes.

If you leave property by Will to someone other than a spouse then the first portion, known as the tax free threshold, is taken free of tax. The amount of the tax free threshold depends on your relationship to the beneficiary and will also depend on whether any other benefits have been received.

For instance where you leave property to a child, or a minor child of a deceased child or, in certain circumstances, to a foster child or to a parent (in an unrestricted form) then the tax free threshold is the largest; known as the Group A threshold. If the property is left to a parent (where it is a restricted interest), brother or sister, niece or nephew, or grandchild, then Group B threshold applies, and if property is left to anyone else (for example a friend, in law, cousin or “partner”) then Group C threshold applies. The tax free thresholds are updated annually, usually in January in line with inflation. Details of the threshold amounts for the current year can be found here.

However, if a person has received other gifts or inheritances since 5 December 1991 they are added together (aggregated) according to certain rules relating to the date on which the gifts were received and from whom they were received. The effect of this may be to reduce or remove the tax free threshold available. If aggregation does apply, then the tax bite may prove disproportionate and professional advice should be sought.

Further information: Law Society of Ireland – Making a Will, Revenue – Thresholds, Rates and Aggregation Rules