NOT financial advice - seek advice from a professional for your specific situation

    TaxKilnUK tax guidance
    TaxKilnUK tax guidance

    Moving Abroad → Irish CAT plus UK IHT

    Irish CAT plus UK IHT Interaction (Cross-Border Estates)

    Irish Capital Acquisitions Tax (CAT) is a beneficiary-side tax at a flat 33 percent on gifts and inheritances above lifetime group-relationship thresholds. The thresholds were increased effective 2 October 2024 to: Group A €400,000 (parent to child); Group B €40,000 (sibling, niece/nephew, grandparent, grandchild, lineal ascendant/descendant); Group C €20,000 (any other relationship). CAT applies to Irish-resident or Irish-ordinarily-resident beneficiaries on WORLDWIDE gifts and inheritances; and to ANY beneficiary (regardless of residence) on Irish-situs assets. CAT runs in parallel with UK Inheritance Tax (an estate-side tax on the deceased's worldwide estate where the deceased is UK-domiciled / long-term resident under the April 2025 LTR test). Primary taxing rights and credit mechanism are governed by domestic law on each side plus a UK-Ireland CAT / IHT credit arrangement.

    Last reviewed:

    Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from your accountant, or contact HMRC. Read our editorial scope →

    In plain English

    Irish CAT is structurally different from UK IHT. UK IHT is an ESTATE tax — it bites on the deceased's worldwide estate (where the deceased is UK-domiciled or now LTR under the April 2025 reform) before assets pass to beneficiaries. Irish CAT is a BENEFICIARY tax — it bites on the recipient of a gift or inheritance, based on the recipient's residence and the relationship between donor and recipient. For a cross-border UK-Ireland estate, both taxes can bite on the same assets. The UK estate pays UK IHT at 40 percent above the £325k nil-rate band (plus the £175k residence nil-rate band where applicable). The Irish-resident beneficiary then pays Irish CAT at 33 percent above the relevant group threshold. There is a CAT / IHT credit mechanism — Ireland gives credit for UK IHT attributable to the same asset, capped at the Irish CAT liability — which prevents pure double taxation but does not eliminate the higher of the two tax burdens. The CAT thresholds were materially increased on 2 October 2024 (Group A from €335k to €400k; Group B from €32,500 to €40,000; Group C from €16,250 to €20,000), which has expanded the headroom for Irish beneficiaries inheriting from UK estates. Key planning structures: (a) CAT Dwelling House Exemption under s.86 CATCA 2003 — completely exempts the inheritance of a dwelling house where the beneficiary has lived in it for 3 years pre-inheritance, has no interest in any other dwelling at the date of inheritance, and continues to occupy for 6 years post-inheritance; (b) careful lifetime gift planning to use Group A/B thresholds across multiple lifetime events; (c) coordination with UK 7-year PET (potentially-exempt transfer) rules on the UK side. Discretionary Trust Tax (DST) at 6 percent / 1 percent annually applies to Irish-resident-settled trusts and can create double-tax exposure with UK trust IHT charges.

    How it works

    Territorial scope of Irish CAT

    Under s.6 CATCA 2003, Irish CAT applies if any of: (a) the disponer is Irish-resident or Irish-ordinarily-resident at the date of disposition; OR (b) the beneficiary is Irish-resident or Irish-ordinarily-resident at the date of disposition; OR (c) the asset is Irish-situs (Irish land, Irish company shares, Irish-located chattels). Note that Irish-domicile is NOT the same trigger as Irish-residence for CAT purposes — Ireland uses residence / ordinary residence here. An Irish-resident UK national beneficiary inheriting from a UK estate is therefore in scope of Irish CAT on worldwide assets received.

    Group thresholds (post-2 October 2024)

    Group A €400,000 — parent to child (including step-children, adopted children, foster children with conditions, parent receiving from child). Group B €40,000 — siblings, nieces/nephews (including children-in-law in specific circumstances), grandparents to grandchildren, lineal ascendants/descendants. Group C €20,000 — any other relationship, including unrelated beneficiaries, cousins, step-parents-in-law, partners not in civil partnership. Thresholds are LIFETIME and AGGREGATE within group — every gift / inheritance received in the same group since 5 December 1991 is aggregated.

    UK IHT credit mechanism

    Where the same asset is subject to both UK IHT (paid by the UK estate) and Irish CAT (paid by the Irish-resident beneficiary), Ireland provides credit for the UK IHT attributable to the asset, capped at the Irish CAT liability on the same asset. The credit is administered under Irish domestic law (no formal CAT / IHT treaty exists between the UK and Ireland; the credit operates as a unilateral measure). Result: the beneficiary effectively pays the higher of the two taxes on the asset, not the sum of both. For most UK estates with assets above the UK nil-rate band passing to Irish-resident children, the UK IHT 40 percent will exceed the Irish CAT 33 percent, so the credit will absorb the Irish CAT and the net Irish CAT bill will be nil.

    Dwelling House Exemption (s.86 CATCA 2003)

    Inheritance of a dwelling house is wholly CAT-exempt where: (a) the beneficiary has continuously occupied the dwelling as their only or main residence for 3 years immediately before the inheritance; (b) the beneficiary does NOT have any interest in any other dwelling house at the date of inheritance; (c) the beneficiary continues to occupy the dwelling as their only or main residence for 6 years after the inheritance. Subject to anti-avoidance and tightening reforms in Finance Act 2017. Material relief for an adult child living with and caring for a parent in the family home — that child can inherit the family home Irish-CAT-free regardless of value.

    Discretionary Trust Tax (DST)

    Irish-resident-settled discretionary trusts attract an initial charge of 6 percent (where the youngest principal object is over 21 and the disponer has died) and an annual charge of 1 percent. DST applies on top of any income tax / CGT on trust income / gains. Where the trust also has UK trust IHT exposure (a relevant property trust under IHTA 1984), the two regimes can stack with limited credit mechanisms.

    Cross-border planning interaction with UK 7-year PET

    UK 7-year PET (Potentially Exempt Transfer) mechanics under IHTA 1984 s.3A treat lifetime gifts as exempt from UK IHT if the donor survives 7 years. The same gifts may attract Irish CAT for an Irish-resident beneficiary immediately on receipt (subject to small-gifts exemption €3k per donor per year). Coordinating UK and Irish gifting strategies requires both timelines to be considered: UK side wants the 7-year clock to run; Irish side has aggregation across the lifetime within group threshold. Annual €3,000 small-gifts exemption on the Irish side (CATCA 2003 s.69) is a useful planning tool for systematic lifetime giving without aggregation impact.

    Who this applies to + key conditions

    Statute + manual references

    Primary: Capital Acquisitions Tax Consolidation Act 2003 (CATCA 2003). Finance Act 2024 (Ireland) — threshold increases effective 2 October 2024.

    Related: s.6 CATCA 2003 — territorial scope of CAT (residence of disponer / beneficiary plus Irish-situs assets); s.86 CATCA 2003 — Dwelling House Exemption; Sch 1 CATCA 2003 — group thresholds and aggregation rules; Discretionary Trust Tax provisions (CATCA 2003 Part 3); UK IHTA 1984 (for UK side); UK-Ireland CAT / IHT credit arrangement (informal credit mechanism under Irish domestic law and UK side under HMRC practice)

    Common mistakes + traps

    Worked example

    Sarah, an Irish-resident UK national whose UK-resident parent dies in 2026

    Sarah moved to Dublin in 2018 and has been continuously Irish-resident and ordinarily resident since 2021. Her father dies in 2026 leaving an estate of £1,200,000 split equally between Sarah and her brother (UK-resident). The estate consists of a UK family home (£600,000), UK investment portfolio (£500,000), and UK cash (£100,000). Sarah's father was UK-domiciled and UK long-term resident.

    1. UK side: UK estate of £1,200,000 worldwide. UK IHT NRB £325,000 plus RNRB £175,000 (family home passing to direct descendants) = £500,000 combined relief. UK IHT 40 percent on £700,000 chargeable estate = £280,000 UK IHT. Net estate after UK IHT = £920,000, split equally = £460,000 each to Sarah and her brother.
    2. Sarah's UK IHT attributable share: 50 percent of the £280,000 UK IHT = £140,000 attributable to her inheritance.
    3. Irish CAT scope: Sarah is Irish-resident and Irish-ordinarily-resident. Her inheritance falls in scope of Irish CAT on worldwide assets received (s.6 CATCA 2003).
    4. Irish CAT computation: Sarah's gross inheritance = £600,000 (her 50 percent share before UK IHT) — but Ireland looks at the NET amount actually received after UK IHT, so €460,000 equivalent (FX-adjusted). Group A threshold €400,000. Chargeable amount = €60,000. Irish CAT at 33 percent = €19,800.
    5. UK IHT credit: Sarah's UK IHT attributable share is £140,000 (approx €165,000 FX-adjusted). The credit is capped at the Irish CAT on the same asset: €19,800. Credit fully absorbs the Irish CAT. Net Irish CAT bill: NIL.
    6. Sarah files Form IT38 (Irish CAT self-assessment) within 4 months of the valuation date, declaring the inheritance, claiming the threshold, and claiming the UK IHT credit. Even though the net bill is nil, the return is required.
    7. Note: pre-2 October 2024 the Group A threshold was €335,000 — Sarah's chargeable amount would have been €125,000 and Irish CAT €41,250 (still fully absorbed by the UK IHT credit on the same facts). The threshold uplift increases headroom for marginal cases where UK IHT credit might not fully absorb the Irish CAT (e.g. inheritance below UK NRB but above Irish CAT threshold).

    Outcome: Sarah pays UK IHT-attributable share via the estate (£140,000) and nil Irish CAT after credit. Her brother pays UK IHT-attributable share (£140,000) and nil Irish CAT (UK-resident, no Irish CAT exposure on UK-situs assets). The 2 October 2024 threshold uplift to €400k Group A was material for Irish-resident beneficiaries of more modest UK estates where the UK IHT credit might otherwise have left a residual Irish CAT bill.

    How this connects to the rest of the framework

    April 2025 IHT reform + LTR →

    UK LTR test determines UK IHT exposure on cross-border estates; Irish CAT then applies for Irish-resident beneficiaries with credit.

    SRT plus Irish residence test →

    Irish residence and ordinary residence of the beneficiary drive CAT territorial scope.

    Irish remittance basis →

    Domicile is distinct from residence for CAT purposes — CAT uses residence/ordinary residence, not domicile.

    UK source income (non-resident) →

    UK-situs assets (rental property etc.) continue to attract UK IHT under standard situs rules.

    Frequently asked questions

    What happens if I miss the Self Assessment deadline?+
    The Self Assessment deadline is 31 January (online filing) for the previous tax year. Miss it and HMRC apply an automatic £100 penalty. Beyond that: £10 per day from 3 months late (capped at £900), 5% of tax due at 6 months late, and another 5% at 12 months late, under Schedule 55 of the Taxes Management Act 1970. If you have a genuine reason (serious illness, bereavement, technical issue with HMRC's systems) you can appeal with evidence; HMRC accepts reasonable excuse appeals in most genuine cases.
    Do I need an accountant or can I file Self Assessment myself?+
    Legally you can file Self Assessment yourself via gov.uk for free, most simple sole-trader returns (single income source, basic expenses) are realistic to self-file. An accountant adds real value when: your trading profit is above £40,000 (extraction-strategy decisions matter), you have multiple income streams (PAYE + self-employment + property + dividends), you've crossed the £90,000 VAT threshold, you're considering incorporation, or you have an HMRC enquiry. Expect to pay £400-£1,500/year for a typical sole-trader accountant; the cost is itself a deductible expense.
    How do payments on account work?+
    When your Self Assessment tax bill exceeds £1,000 for the first time, HMRC requires payments on account toward NEXT year's tax. Half the current bill is due 31 January (alongside the current bill); the other half is due 31 July. So your first January after crossing the threshold can hit with a double-bill: last year's balance + first payment on account. Adjust via Form SA303 if you expect next year's income to drop substantially. Payments on account don't apply if more than 80% of your tax is collected via PAYE.
    What if the family home is in Ireland and my parent is UK-resident?+
    An Irish-situs asset (Irish land) is in scope of Irish CAT regardless of the residence of either the disponer or beneficiary. UK IHT would also apply (UK-domiciled / LTR disponer with worldwide estate). Both taxes apply to the Irish family home. UK IHT credit applies on the Irish side capped at the Irish CAT — typically the credit fully absorbs the Irish CAT for the high-IHT-rate UK estate.
    Does the Irish Dwelling House Exemption apply if I inherit a UK family home?+
    Yes if the conditions are met. The exemption looks at the beneficiary's occupation of THE DWELLING that is the subject of the inheritance — it can be UK-located. An Irish-resident adult child who has lived in the UK family home with their parent for 3+ years immediately before the inheritance, who has no interest in any other dwelling at the date of inheritance, and continues to occupy for 6+ years afterwards, can claim the exemption on the Irish side. The exemption applies for Irish CAT only; UK IHT is unaffected and runs separately on the UK estate side.
    What is the small-gifts exemption?+
    CATCA 2003 s.69 exempts the first €3,000 received by a beneficiary from any single disponer in any calendar year. It is used systematically in Irish lifetime gifting strategy — a parent can give €3,000 each year to each child without aggregating against the Group A threshold. Over a 25-year window this can transfer €75,000 per donor-beneficiary pair outside the threshold framework. UK side has its own £3,000 annual exemption under IHTA 1984 s.19, which is independent.
    Are partners in cohabitation treated as Group A?+
    No, unless they are in a Civil Partnership registered under the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010. A registered Civil Partner is treated as a Group A beneficiary for CAT purposes (parent-to-child threshold €400,000). Unregistered cohabiting partners fall in Group C (€20,000 threshold) regardless of duration of cohabitation. The Cohabitants' redress scheme under the 2010 Act covers maintenance / property transfer on relationship breakdown — not CAT.
    When is the CAT return filed and the tax paid?+
    Form IT38 must be filed and the CAT paid by 31 October of the year following the valuation date for inheritances / gifts where the valuation date falls between 1 January and 31 August. For valuation dates between 1 September and 31 December, the filing date is 31 October of the year of valuation. The valuation date for an inheritance is generally the date of death (subject to specific rules for postponed valuation). Late filing attracts interest at 0.0219 percent per day plus surcharges.

    Free + regulated-body resources

    Last reviewed: