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I am currently drafting my will.Retired and live in Irish Republic.

Customer Question

I am currently drafting my will.Retired and live in Irish Republic. Live off pension that comes from U.K. Our house purchased from proceeds of house sale in UK. Do not receive any income from Irish Government. Need to know if the beneficiary who is a U.K. Resident will have to pay inheritance tax in Ireland or the U.K. Also if it is U.K. What is the threshold.

Many thanks.
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.

The beneficiary of a legacy in a will is outside the UK tax envelope. It is the deceased's estate which is liable to Inheritance Tax (IT) in the UK. IT does not kick in until 325K and then is levied at 40% flat rate on the surplus.

In Ireland the situation is different, and the tax is called Capital Acquisitions Tax. There it is the beneficiary who is liable to the tax on death. It only applies to possessions in Ireland. There are exemptions depending upon the relationship between the deceased and the beneficiary. CAT is 33% on estates over 16.75K euros. There are other rates for relatives, but your question is silent as to the prospective recipient.

I do hope I have been able to throw some light on your question.
Customer: replied 3 years ago.
Hi,Keith, thank you for the info.However
What I really want to know is does the beneficiary have the choice to pay tax in Ireland OR U.K. In other words is there some sort of governmental
Reciprocal agreement as there is with the National Health Service.

Thanks again
Expert:  bigduckontax replied 3 years ago.
The beneficiary is required to make a tax return in Ireland accounting for the legacy. If the beneficiary is not resident in Ireland they must get the return filed by an agent, presumably in your case, the executor of your will. The Irish Government web site suggests a solicitor an appropriate agent.
bigduckontax, Accountant
Category: Tax
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Expert:  bigduckontax replied 3 years ago.
Thank you for your support.

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