Written Answers. - Probate Tax.
Ulick Burke
Question:
135
Mr. U. Burke
asked the
Minister for Finance
the plans, if any, he has to abolish probate tax; the total return from this tax during the past two tax years; the plans, if any, he has to substantially increase the thresholds for this tax; and if he will make a statement on the matter.
[13676/99]
Probate tax was introduced in 1993 in order to increase the yield from capital taxation by applying a relatively modest charge on a wide base to estates passing on inheritance. Probate tax is charged at a rate of 2 per cent on the net value of non-exempt assets left by a deceased, whether the assets pass under a will or intestacy. The yield from probate tax for the past two years is as follows: 1997, £17.0 million; 1998, £19.7 million.
Estates with a taxable value of £11,250 or less are exempt from probate tax. This threshold is indexed annually by reference to the consumer price index. Outstanding debts of the deceased, as well as funeral expenses, may be deducted as expenses of the estate in arriving at the taxable value. There is full exemption for the spouse and also for the share of the family home passing to dependent children or dependent relatives. Jointly-owned property which passes automatically from one joint owner to another joint owner is not subject to probate tax. Agricultural land and buildings may be reduced in value by 30 per cent for probate tax purposes. There are other exemptions for pension benefits, charitable bequests, heritage property and the proceeds of section 60 insurance policies, which are used to pay inheritance tax/probate tax.
The Revenue Commissioners have discretion to allow for deferred payment of the probate tax in situations of illiquidity or hardship. For example, payment by instalment may be arranged, including waiver of interest on late payment where appropriate. Each beneficiary can claim his or her portion of the probate tax as an expense in calculating the value of the benefit for the purposes of inheritance tax, if any, under the capital acquisitions tax code.
Having regard to the generous reliefs and exemptions that apply, the very modest rate of tax and the special arrangements which cater for problems with payment, it is considered that the provisions of the probate tax strike a fair balance between the need to ensure a broader distribution of the tax burden and the need to take due account of ability to pay. Consequently, I have no plans to abolish this tax.
Paul McGrath
Question:
136
Mr. McGrath
asked the
Minister for Finance
the amounts collected by the Revenue Commissioners in probate tax each year since its introduction; the threshold at which this tax applies and the rate applicable; the plans, if any, he has to increase the threshold in view of the increase in property values.
[13857/99]
Probate tax was introduced in 1993 in order to increase the yield from capital taxation by applying a relatively modest charge on a wide base to estates passing on inheritance. Probate tax is charged at a rate of 2 per cent on the net value of non-exempt assets left by a deceased, whether the assets pass under a will or intestacy. The yield from probate tax is as follows: 1993, £1.7 million; 1994, £9.6 million; 1995, £12.3 million; 1996, £14.4 million; 1997, £17.0 million; 1998, £19.7 million.
Estates with a taxable value of £11,250 or less are exempt from probate tax. This threshold is indexed annually by reference to the consumer price index. Outstanding debts of the deceased, as well as funeral expenses, may be deducted as expenses of the estate in arriving at the taxable value. There is full exemption for the spouse and also for the share of the family home passing to dependent children or dependent relatives. Jointly-owned property which passes automatically from one joint owner to another joint owner, is not subject to probate tax. Agricultural land and buildings may be reduced in value by 30 per cent for probate tax purposes. There are other exemptions for pension benefits, charitable bequests, heritage property and the proceeds of section 60 insurance policies, which are used to pay inheritance tax/ probate tax. The Revenue Commissioners have discretion to allow for deferred payment of the probate tax in situations of illiquidity or hardship. For example, payment by instalment may be arranged, including waiver of interest on late payment where appropriate.
Each beneficiary can claim his or her portion of the probate tax as an expense in calculating the value of the benefit for the purposes of inheritance tax, if any, under the capital acquisitions tax code.
Having regard to the generous reliefs and exemptions that apply, the very modest rate of tax and the special arrangements which cater for problems with payment, it is considered that the provisions of the probate tax strike a fair balance between the need to ensure a broader distribution of the tax burden and the need to take due account of ability to pay. Consequently, I have no plans at this stage to amend the threshold for this tax.
