What are tax reliefs?

Tax reliefs reduce the amount of income that you pay tax on. The tax reliefs you are entitled to depend on your personal circumstances and you must take into account the thresholds below.

Tax Relief Thresholds
Tax Relief Thresholds

What are the limits on claiming reliefs?

Tax Relief Thresholds

The following tables show the thresholds that apply to tax reliefs.

    Leasing farm land

    Rental income from land (and BPS entitlements where leased with land) may or may not be subject to income tax – depends on individuals circumstances.

    Landowners who enter a lease to an unconnected person of a definite term greater than 5 years, will attract varying levels of tax relief depending on the term as set out in the table below.

    Connected persons include grandparents, parents, brothers, sisters, children, grandchildren, the spouse of the lessor or the immediate family of the spouse. Leasing of lands to an immediate family member does not attract and tax concessions but leases between aunts/uncles and nieces/nephews do qualify for the tax exemption.

    Lands leased to a Limited Company is also eligible for tax relief.

    Maximum reduction allowed each year
    Lease TermAmount
    5 to 7 years€18,000
    7 to 10 years€22,500
    10 to 15 years€30,000
    15 years +€40,000

    Capital Acquisition Tax

    What is Capital Acquisition Tax?  Term covering gift tax and inheritance tax. Inheritance tax arises on the value if the property passing to somebody on the death of another person. Gift tax arises on the value of the gifts received from a living person.

    Who is taxable? With the exception of gifts or inheritance between husbands and wives and for certain charitable or public purposes, all persons can be liable.

    Rate of Tax: Current rate of Capital Acquisition Tax is 33%

    Small Gifts Exemption: The first €3,000 of the taxable value of a gift (not inheritance) is exempt from tax. The exemption is limited to one gift per disponer in a calendar year. The beneficiary can take €3,000 from the same disponer in different calendar years without paying CAT . They can take gifts from several other disponers in the same calendar year and first €3,000 of each of those gifts will be tax free.

    How much can be received tax free? The amount received tax free will depend on the relationship to the donor. However, this tax free amount is not an annual allowance and any gifts or inheritances are aggregated with all gifts or inheritances received since 5th December 1991.  See table below for thresholds for the various categories.

    CAT thresholds from Oct 2019
    GroupAmountDetail
    Group A€335,000Applies where the beneficiary is a child (including adopted, step-children and certain foster children) or minor child of a deceased child of the disponer. Parents also fall within this threshold where they take an inheritance of absolute interest from a child.
    Group B€32,500Applies where the beneficiary is a sibling, niece, nephew or lineal ancestor or lineal descendant of the disponer.
    Group C€16,250Applies in all other cases.

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    Robert Johnson - Senior Tax Consultant

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