All benefits, taken by either gift or inheritance, from any source except a spouse, are liable to capital acquisitions tax. A person may receive gifts or inheritances in value up to £300,000 from his-her parents free of CAT, group one threshold.
Stepchildren and legally adopted children are also entitled to this threshold.
In the situation outlined by the Deputy, the child would be entitled to the tax-free threshold of £300,000 on receipt of a gift or inheritance from the second spouse of their natural parent, following the divorce and remarriage of that parent. The child would be considered a stepchild of the second spouse.
However, where the child has received previous gifts or inheritances under the same group threshold since 2 December 1988 the value of these benefits will be aggregated with the value of the current benefit when determining the CAT liability.