Written Answers. - Capital Acquisitions Tax.
Noel Ahern
Ceist:
84
Mr. N. Ahern
asked the
Minister for Finance
the changes in relation to capital acquisitions tax in the Finance Act, 2000, in relation to siblings not living under the same roof; the threshold at the time capital acquisitions tax was first introduced; the current threshold and the threshold if indexed linked to the consumer price index; if the tax has changed over the years, the thresholds compared to average industrial pay; the plans he has to amend this threshold in the next year to two years; the thresholds for probate tax; if threshold is allowed where a higher figure for estate exists; the number caught in the capital acquisitions tax net in recent years; and if the figures prove the system is geared more towards ordinary PAYE earners.
[11339/00]
As the Deputy is aware, I introduced substantial changes to the capital acquisitions tax, CAT, legislation in the Finance Act, 2000. These measures, which included the introduction of a single CAT rate of 20% to replace the previous rates of 20%, 30% and 40%, will reduce the CAT liability of all beneficiaries, including siblings.
I also increased the three tax free thresholds for gifts and inheritances. The tax free amount now applying on transfers between siblings is £30,000. When CAT was first introduced in 1976, the threshold on transfers between siblings was £10,000. If this figure had been indexed linked to the consumer price index since 1976, the amount which would now apply is approximately £126,000. Prior to the increase in the exemption thresholds this year, the thresholds were indexed annually to the consumer price index since 1990.
There are no data available from the Central Statistics Office for the average industrial wage in 1976. However, data are available for the average manufacturing weekly wage for that year, which was £52.50. In 1999, the average industrial weekly wage was £315.67, based on figures to date.
When considering the increase in the three group thresholds in this year's Finance Act, I decided against further increases because of Exchequer costs. However, as I indicated during the discussions of the Finance Bill, I will review the issue of the structure of the tax for the next Finance Bill.
The probate tax threshold was increased in the Finance Act, 2000, from £11,250 to £40,000. Probate tax is charged at a rate of 2% on estates in excess of this threshold. Relief is allowed where the taxable value of an estate marginally exceeds the threshold. In such cases, the tax liability will not exceed the amount by which the taxable value exceeds the threshold.
The package of measures introduced in this year's Finance Act constitutes the single biggest reduction in the incidence of CAT since its introduction in 1976 and, as I have stated above, will reduce the tax liability for all beneficiaries.
