Your move to Ireland is an exciting chance to start fresh and begin a new chapter in life. But before you get fully settled into your new home, there’s the small matter of the Irish Tax System to contend with.
There are key differences between what you’re used to in the UK and how taxes work in Ireland. And one area we find people often need a little help to understand is inheritance tax.
The good news is that Ireland’s inheritance tax system is pretty straightforward once you grasp the basics!
This guide is designed to help UK expats moving to Ireland understand how inheritance tax works here. By the end, you’ll be able to move forward with confidence, knowing you’re staying compliant and making the most of the reliefs and advantages available to you.
Understanding Inheritance Tax (IHT) in the UK vs Ireland
Inheritance tax – the money that might need to be paid when someone passes away and leaves behind money, property, or other assets – isn’t the same in Ireland as in the UK.
Let’s break down the difference between the 2 systems:
Inheritance Tax UK
IHT in the UK is paid to HM Revenue and Customs (HMRC) using money from the deceased person’s estate (everything a person owns at the time of their death). This is usually arranged by the person managing the estate, known as the executor.
This means whoever inherits from the estate (the beneficiary) won’t pay tax on what they receive.
Keep in mind that IHT only needs to be paid if the total value of the estate is over a certain threshold. This is known as the nil-rate band. As of 2025, the UK inheritance tax threshold is £325,000, and anything above that is taxed at 40%.
Example:
- If your estate is worth £200,000, no inheritance tax is due (because it’s under the threshold).
- If your estate is worth £400,000, the first £325,000 is tax-free. The remaining £75,000, it’s taxed at 40%. This means £30,000 from your estate will be owed in inheritance tax.
Inheritance Tax Exemptions and Reliefs in the UK
Inheritance tax isn’t always clear-cut. There are a number of exemptions and reliefs that can significantly lower the amount of tax owed by a person’s estate.
Spouses and Civil Partner Exemptions
No inheritance tax is charged if everything is left to a spouse or civil partner, as long as the recipient is a permanent UK resident. This exemption applies no matter how much the estate is worth (even if it’s above the nil-rate band), protecting surviving partners from tax burdens after their loved one passes away.
Residence Nil-Rate Band (RNRB)
If someone leaves their home to their children or grandchildren, they may qualify for an extra allowance (currently up to £175,000). This can bump the tax-free threshold up to £500,000 (£325,000 + £175,000).
Charitable Donations
Money left to charity is completely exempt from inheritance tax. Also, if someone leaves at least 10% of their estate to charity, the tax rate on the rest of their estate can be lowered from 40% to 36%.
Gifts
Money or assets shared during the deceased person’s lifetime are sometimes exempt from IHT. This rule applies if the person lives for at least 7 years after giving the gift. But if they die within those 7 years, the gift may be included in the estate, and IHT could apply.
Whether or tax applies depends on the following:
- Who received the gift (and their relationship to the giver)
- The value of the gift
- When the gift was given
It’s best to get professional advice from a UK tax adviser about gifts you can give away tax-free during your lifetime.
Please note: We are not UK tax advisers. The information in this post is for general guidance only and should not be relied upon as tax advice. You should seek advice from a qualified UK tax professional regarding your specific situation.
Irish Inheritance Tax
Inheritance tax in Ireland is called Capital Acquisitions Tax (CAT). Unlike in the UK, where the estate pays IHT, the person who inherits the money or assets is the one who pays it in Ireland.
The amount of CAT a person will owe depends on how closely they’re related to the person giving the gift or inheritance. It is important to be clear on the residency, ordinary residency and domicile position of both parties. There are 3 different groups, each with its own tax-free threshold based on that relationship.
In 2025, these thresholds are:
- Group A (€400,000): When inheriting from a parent (including stepchildren and adopted children).
- Group B (€40,000): When receiving a gift or inheritance from a sibling, grandparent, aunt, uncle, or in-law.
- Group C (€20,000): When inheriting from a friend, cousin, or someone not closely related.
If someone inherits more than the tax-free threshold, they’ll pay the CAT rate of 33% on anything over the limit.
Example A
If a mother leaves her daughter €500,000, the first €400,000 is tax-free under Group A (if the daughter has no prior gifts in that threshold group). The remaining €100,000 is taxed at 33%, which comes to €33,000 in tax.
Overall, the daughter will receive an inheritance of €467,000 (€500,000 – €33,000).
Example B
If someone leaves their friend €25,000, the first €20,000 is tax-free under Group C (assuming no prior gifts/inheritances in that threshold). The remaining €5,000 is taxed at 33%, which means the friend will pay €1,650 in Capital Acquisitions Tax (CAT).
So, after paying the CAT, the friend would be left with an inheritance of €23,350 (€25,000 – €1,650).
CAT Exemptions and Reliefs
Just like in the UK, there are exemptions to Irish inheritance tax laws. These include:
Spouse and Civil Partner Exemptions
If a person leaves everything to their spouse or civil partner, they don’t have to pay any inheritance tax. This means surviving partners aren’t hit with extra costs after losing their loved ones.
Exemption for a Dwelling House
This exemption allows close family members to inherit a family home without paying taxes. For example, if a daughter inherits a home from her father and has been living there for at least 3 years before he passed away, she may not have to pay any tax on it. To qualify, though, she must continue living in the house and not own (or have an interest in) any other property. Terms and conditions apply as always – some recipients need to remain in the home for a period after the inheritance to avoid claw-back of the relief.
Agricultural Relief
If someone inherits a working farm, they could take up to 90% off the land’s value for tax purposes. To qualify, most of the estate needs to be farmland that’s actually used for farming. The person inheriting it also needs to be a trained farmer or spend over half their working time on the farm. Various conditions need to be met and it’s always worth speaking to a tax expert if you intend to claim the relief.
Business Relief
If someone inherits a business or shares in a business, the taxable value can be cut by up to 90%. This helps keep businesses in the family, but it only applies if the actual business is passed on, not just individual items used. Again, various conditions need to be met and it’s always worth speaking to a tax expert if you intend to claim the relief.
The IHT Implications of Dual Residency
If you’re a dual resident of Ireland and England, things can get a little tricky. As we’ve just learned, each country has its own inheritance tax rules, and it’s important to understand how your residency status affects your tax obligations.
Where You Live Matters for IHT
Where you’re taxed depends on where you’re considered a resident – and that can impact how much inheritance tax your estate might face.
In the UK, you’ll be resident if both of the following apply:
- You meet one or more of the automatic UK tests or the sufficient ties test
- You do not meet any of the automatic overseas tests
UK tax residency rules can be complex so we recommend you obtain advice to understand how they apply to your personal situation.
In Ireland, you’re considered a tax resident if you either:
- Spend 183 days or more in one year there, or
- Spend 280 days over two consecutive years (at least 30 days in the second year)
If you divide your time between the UK and Ireland, you might be considered a tax resident in both countries at the same time, meaning you could be taxed twice! But don’t worry – a Double Taxation Agreement (DTA) can help. And speaking of DTAs…
Avoiding Double Taxation
As a UK expat in Ireland, you may be worried about potentially facing IHT in both the UK and Ireland. Thankfully, a tax treaty between the 2 countries can help you avoid being taxed twice on the same assets.
The Treaty is complex but broadly speaking, here’s how it works:
- Ireland applies CAT based on the residency of the beneficiary (the person receiving the inheritance) or disponer (person giving the inheritance) or the location of the assets
- The UK charges IHT based on the domicile of the deceased (where you considered your permanent home).
N.B New UK rules, effective from the 6 April 2025, will mean that IHT will apply to an individual’s worldwide assets if they have been resident in the UK for 10 out of the last 20 tax years immediately preceding the tax year of death or the transfer of assets.
So, if someone living in Ireland inherits something from a UK resident, the inheritance would possibly be subject to tax on both sides. But don’t worry – Ireland will give credit for the UK tax already paid on UK assets (but only up to the amount of Irish tax owed).
The DTA ensures that the country where the property is not situated gives a credit for tax paid in the country where the property is situated. Usually this means that the country where the disponer is domiciled (or resident) gives credit for the tax paid in the other country on property situated there. Credit is given only where the same property is taxed in both countries on the same event. The amount of the credit cannot be greater than the Irish tax on the foreign property.
To claim it, the person receiving the inheritance will need to file a tax return in Ireland and include a certificate from HMRC showing how much UK Inheritance Tax was paid.
Cross-border inheritance tax is complex – get advice to determine whether and how the treaty applies in your case.
How to Manage Cross-Border Assets
Managing assets across the UK and Ireland can be complex, but here are a few tips that may help:
Have Wills in Both Countries
If you own property or assets in the UK and Ireland, it’s a good idea to take advice to determine whether you should have a will in each country, ensuring both countries’ legal requirements are met.
Just make sure the two wills are carefully coordinated. You don’t want one to accidentally cancel out the other.
Think About Asset Location
The location of your assets will affect how they’re taxed when passed on so get advice to determine how the rules apply in your case.
The same goes for financial assets like bank accounts, shares, or investments – they may be taxed based on where they’re held. It’s worth planning ahead to manage potential risks and liabilities.
Get Professional Cross-Border Advice
Because inheritance laws and tax rules can vary so much between Ireland and the UK, it’s worth speaking with someone who understands both sides of the coin – usually this means having a tax adviser in both jurisdictions who understand international taxes.
A cross-border estate planner or two tax advisors working together in each country will help you:
- Ensure your wills are set up properly
- Take advantage of tax savings
- Avoid paying taxes twice
- Make sure your assets go to the right people
Strategies for Minimising Tax Liabilities
When planning your estate, there are some strategies to help reduce the taxes your beneficiaries may face. Here’s what we recommend:
Consider Trusts and Policies of Insurance
Trusts and certain insurance policies can help reduce inheritance taxes (IHT and CAT) on your estate.
- Trusts: A trust can move assets out of your estate, potentially reducing IHT in the UK but take advice if you relocate to Ireland with a UK trust to ensure there are no unanticipated Irish tax outcomes on death (Note also recent UK IHT changes in this area).
- Section 72 policies: are life assurance policies specifically designed to help pay inheritance tax (Capital Acquisitions Tax or CAT) liabilities arising on the death of an individual. These policies are structured to ensure that the proceeds are exempt from CAT when used to pay inheritance tax, provided certain conditions are met.
Claim Tax-Free Allowances
In the UK, you can leave up to £325,000 tax-free, plus an extra £175,000 if your home goes to children or grandchildren, and anything left to a spouse is fully exempt. In Ireland, life-time tax-free thresholds are also available, based on your relationship with your beneficiary.
Give Gifts While You’re Alive
Giving gifts while you’re still around can help shrink your estate and potentially lower the inheritance tax burden. In the UK, you can give up to £3,000 each year without triggering tax, and gifts to your spouse are tax-free. In Ireland, making lifetime gifts can also reduce the CAT your beneficiaries have to pay. Annually one person can give €3,000 to another as a gift without Irish CAT arising.
Expat Taxes are Here to Help
Understanding the Irish tax system can be tricky, especially as an expat from the UK. Without the right planning, your estate or inheritance could face unexpected costs.
That’s where we come in. Our team specialises in helping UK expats like you avoid double taxation and take full advantage of available reliefs and exemptions. We work UK Tax Advisers to offer aligned Irish/UK tax advice.
Book a consultation with Expat Taxes today for clear, personalised advice, tailored to your situation.
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DISCLAIMER: The material in this article is for general information purposes only and does not constitute legal or taxation advice. Legal, financial, investment and taxation advice should be sought before acting or refraining from acting. All information and taxation rules are subject to change without notice. Expat Taxes Limited and RemitEase Limited (hereafter ‘the parties’) accept no liability for any action taken based on the information in this article or any of the articles in our blog series. The parties do not provide financial planning, investment, or mortgage advice; this article is provided only for general information. We are not authorised/licensed to provide financial advice, and this article should not be considered to constitute advice of this type in any respect.
