In the Budget 2000, I increased the probate tax threshold from £11,250 to £40,000 – the largest increase of its kind since the tax was introduced in 1993. This increase must be taken in context with the other major capital acquisitions tax changes also made in last year's budget. These included an increase in the three CAT exemption thresholds, the exemption threshold for transfers from a parent to a child is now £300,000, a single CAT rate of 20% to replace the previous higher rates of 30% and 40% and the introduction of a ‘dwelling house' relief which will, in many cases, exempt from inheritance tax the transfer of a family home.
These significant changes constitutes the biggest single easement in the structure of CAT since its introduction in 1976. Any further changes were ruled against on account of Exchequer costs; however, the issue of further changes in CAT and probate tax will be kept under review.
Probate tax is levied at a rate of only 2% where the £40,000 threshold is exceeded. However, there is provision in the legislation for deferral of probate tax by the Revenue Commissioners in cases of hardship or where the estate is illiquid. In the case referred to by the Deputy, I have been informed by the Revenue Commissioners that when the probate tax return has been lodged and processed and the final liability quantified then the method of payment of the tax liability will be considered in the light of the financial circumstances of the individual.
