Dáil Éireann debate -
Wednesday, 5 May 1999

Vol. 504 No. 2

Written Answers. - Tax Allowances.

Proinsias De Rossa

Question:

184 Proinsias De Rossa asked the Minister for Finance the plans, if any, there are to enable the survivors of unmarried couples, or same sex couples, to pay death duties on the same basis as the survivors of married couples; and if he will make a statement on the matter. [11313/99]

Minister for Finance (Mr. McCreevy):

The death duties referred to by the Deputy involve capital acquisitions tax (CAT) and probate tax. The position is as follows in regard to the issue raised by the Deputy.

Transfers between spouses do not give rise to any charge to CAT, either on death or by means of a gift. Furthermore there is a full exemption from probate tax for the surviving spouse.

In the case of all unmarried couples the survivor would pay CAT and probate tax on the following basis. For the current year the qualifying threshold for an inheritance taken from an unrelated person is £12,860. This "Class III" threshold is indexed annually by reference to the consumer price index. Where the beneficiary has received previous inheritances since 2 December 1998, the value of these benefits is added to the value of the current benefit when determining the CAT liability. The rate of CAT on inheritances is nil up to the appropriate threshold rate, 20 per cent on the next £10,000, 30 per cent on the next £30,000 and 40 per cent on the balance.

Probate tax, introduced in 1993 is charged at a rate of 2 per cent on the net value of non-exempt assets left by the deceased, whether the assets pass under a will or intestacy. For the current year, estates with a taxable value of £11,250 or less are exempt from probate tax. Furthermore any outstanding debts of the deceased, as well as funeral expenses, may be deducted as expenses of the estate in arriving at the taxable value. Jointly-owned property, which passes automatically from one joint owner to another joint owner is not subject to probate tax.

I appreciate the issues which the Deputy has raised. I recently undertook in the Dáil that prior to the next budget, I would examine the CAT code in some detail bearing these issues in mind. Any changes in the CAT area are costly and, for this reason, must therefore be looked at in a budgetary context when choices have to be made on which elements of the tax system to address.