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Dáil Éireann debate -
Tuesday, 13 Feb 2001

Vol. 530 No. 3

Written Answers. - Tax Code.

Michael Ring

Michael Ring

Michael Ring

Question:

128 Mr. Ring asked the Minister for Finance if a person is liable for inheritance tax when he or she inherits the use of land for his or her lifetime only, rather than inheriting the ownership of the land; and if he will make a statement on the matter. [3556/01]

Charlie McCreevy

Minister for Finance (Mr. McCreevy)

Where a disponer bequeaths an asset to a beneficiary for the beneficiary's lifetime only, such a transfer is considered an inheritance for the purposes of capital acquisitions tax – CAT. For example, the transfer of land to an individual for use during his or her lifetime. However, the legislation recognises the fact that such transfers are lifetime interests. Accordingly, in such cases, the value of the asset is reduced for CAT purposes depending on the beneficiary's age at the relevant date, that is, the death of the disponer or the valuation date if later. The value of the life interest is calculated by multiplying the value of the asset by the appropriate factor contained in column 3 or 4 of the following table – appendix 1 – which is appropriate to the age and sex of the person for the duration of whose life the interest is to be valued.

Column 1 contains the age of the beneficiary, column 3 is the factor appropriate to a male of that age and column 4 is the factor appropriate to a female of that age. Column 2 is only relevant where there is a joint life interest. When the value of the life interest is calculated using the attached table, the normal CAT rules then apply to this amount. CAT is levied at a rate of 20% on the value of the inheritance in excess of the relevant exempt threshold. There are three exempt thresholds as follows: group I, £316,800, where the recipient is a child, or minor child of a deceased child, that is, certain grandchildren, this threshold also applies to a parent where he or she takes an absolute inheritance on the death of a child; group II; £31,680, where the recipient is a brother, sister, nephew, niece, lineal ancestor or lineal descendent, other than those covered by class I; group III; £15,840, where the recipient does not fall within classes I or II, that is, non-lineal relations and strangers. Where a beneficiary has received previous gifts or inheritances since 2 December 1988 under the same group threshold, the value of these benefits must be taken into account for the purposes of determining the current liability to tax.
There are various reliefs applying under the CAT legislation, including agricultural relief which may be relevant on the transfer of land. This relief operates by allowing the value of agricultural land, buildings, livestock and machinery to be reduced by 90% for the purposes of calculating the value for CAT. This 90% relief applies to agricultural assets received both by inheritance and gift. Agricultural relief applies only where the beneficiary's agricultural assets after the gift or inheritance are 80% or more of total assets.
Appendix I

Years of age

Joint Factor

Value of an interest in a capital of £1 for a male life aged as in column 1

Value of an interest in a capital of £1 for a female life aged as in column 1

0

.99

.9519

.9624

1

.99

.9767

.9817

2

.99

.9767

.9819

3

.99

.9762

.9817

4

.99

.9753

.9811

5

.99

.9742

.9805

6

.99

.9730

.9797

7

.99

.9717

.9787

8

.99

.9703

.9777

9

.99

.9688

.9765

10

.99

.9671

.9753

11

.98

.9653

.9740

12

.98

.9634

.9726

13

.98

.9614

.9710

14

.98

.9592

.9693

15

.98

.9569

.9676

16

.98

.9546

.9657

17

.98

.9522

.9638

18

.98

.9497

.9617

19

.97

.9471

.9596

20

.97

.9444

.9572

21

.97

.9416

.9547

22

.97

.9387

.9521

23

.97

.9356

.9493

24

.97

.9223

.9464

25

.97

.9288

.9432

26

.97

.9250

.9399

27

.97

.9209

.9364

28

.97

.9165

.9328

29

.97

.9119

.9289

30

.96

.9068

.9248

31

.96

9015

.9205

32

.96

.8958

.9159

33

.96

.8899

.9111

34

.96

.8836

.9059

35

.96

.8770

.9005

36

.96

.8699

.8947

37

.96

.8626

.8886

38

.95

.8549

.8821

39

.95

.8469

.8753

40

.95

.8384

.8683

41

.95

.8296

.8610

42

.95

.8204

.8534

43

.95

.8107

.8454

44

.94

.8005

.8370

45

.94

.7897

.8283

46

.94

.7783

.8192

47

.94

.7663

.8096

48

.93

.7541

.7997

49

.93

.7415

.7896

50

.92

.7287

.7791

51

.91

.7156

.7683

52

.90

.7024

.7572

53

.89

.6887

.7456

54

.89

.6745

.7335

55

.88

.6598

.7206

Years of age

Joint Factor

Value of an interest in a capital of £1 for a male life aged as in column 1

Value of an interest in a capital of £1 for a female life aged as in column 1

56

.88

.6445

.7069

57

.88

.6288

.6926

58

.87

.6129

.6778

59

.86

.5969

.6628

60

.86

.5809

.6475

61

.86

.5650

.6320

62

.86

.5492

.6162

63

.85

.5332

.6000

64

.85

.5171

.5830

65

.85

.5007

.5650

66

.85

.4841

.5462

67

.84

.4673

.5266

68

.84

.4506

.5070

69

.84

.4339

.4873

70

.83

.4173

.4679

71

.83

.4009

.4488

72

.82

.3846

.4301

73

.82

.3683

.4114

74

.81

.3519

.3928

75

.80

.3352

.3743

76

.79

.3181

.3559

77

.78

.3009

3377

78

.76

.2838

.3198

79

.74

.2671

.3023

80

.72

.2509

2855

81

.71

.2353

.2693

82

.70

.2203

.2538

83

.69

.2057

.2387

84

.68

.1916

.2242

85

.67

.1783

.2104

86

.66

.1657

.1973

87

.65

.1537

.1849

88

.64

.1423

.1730

89

.62

.1315

.1616

90

.60

.1212

.1509

91

.58

.1116

.1407

92

.56

.1025

.1310

93

.54

.0939

.1218

94

.52

.0858

.1132

95

.50

.0781

.1050

96

.49

.0710

.0972

97

.48

.0642

.0898

98

.47

.0578

.0828

99

.45

.0517

.0762

100 or over

.43

.0458

.0698
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